The Jung Corporation's production budget calls for the following number of units to be produced each quarter for next year: Budgeted production Quarter 1 45,000 units Quarter 2 38,000 units Quarter 3 34,000 units Quarter 4 48,000 units Each unit of product requires three pounds of direct material. The company's policy is to begin each quarter with an inventory of direct materials equal to 30% of that quarter's direct material requirements. Budgeted direct materials purchases for the third quarter would be:

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abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2021-05-26T20:59:05+02:00

Answer:

114,600 pounds.

Explanation:

Calculation to determine what Budgeted direct materials purchases for the third quarter would be:

First step is to calculate the production requirement

Production requirement = 34,000 units * 3 pounds each units

production requirement=102,000 pounds

Second step is to calculate the closing stock

Closing stock = Next quarters requirement * 30% Closing stock=[48,000*3 pounds]*30%

Closing stock=43,200.

Third step is to calculate the opening stock

Opening = current month's requirement *30%

Opening stock=[34,000 *3 pounds]*30%

Opening stock=30,600 pounds.

Now let calculate what Budgeted direct materials purchases for the third quarter would be:

Using this formula

Direct material purchases = Production requirement + Closing stock - Opening stock

Let plug in the formula

Budgeted material purchase = 102,000 + 43,200 - 30,600

Budgeted material purchase =114,600 pounds

Therefore Budgeted direct materials purchases for the third quarter would be:114,600 pounds