Answer:
Step-by-step explanation:
To prepare a direct materials purchases budget for Waterway Industries for each quarter of 2022, we will first calculate the raw materials required based on the production budget and the desired ending inventory.
In Quarter 1, the production requirement is 6,200 units. We multiply the raw materials needed by the raw material requirement per unit, which is 4 kg: 6,200 units * 4 kg/unit = 24,800 kg. To meet the desired 30% ending inventory for Quarter 1, we add 30% of Quarter 1's production requirement to the raw materials needed: 24,800 kg + (0.30 * 24,800 kg) = 32,240 kg.
In Quarter 2, the production requirement is 8,300 units. We follow the same process, calculating raw materials needed as 8,300 units * 4 kg/unit = 33,200 kg and then adding 30% of Quarter 2's production requirement: 33,200 kg + (0.30 * 33,200 kg) = 43,160 kg.
For Quarter 3 and Quarter 4, the calculations are similar:
- Quarter 3: 9,000 units * 4 kg/unit + (0.30 * 9,000 units * 4 kg/unit) = 37,200 kg
- Quarter 4: 10,100 units * 4 kg/unit + (0.30 * 10,100 units * 4 kg/unit) = 41,630 kg
We need to consider the starting raw materials inventory on December 31, 2021, which is 1,860 kg.
To determine the direct materials purchases required for each quarter, we subtract the beginning inventory from the raw materials needed:
- Quarter 1: 32,240 kg - 1,860 kg = 30,380 kg
- Quarter 2: 43,160 kg - 32,240 kg = 10,920 kg
- Quarter 3: 37,200 kg - 43,160 kg = -5,960 kg (excess inventory)
- Quarter 4: 41,630 kg - 37,200 kg = 4,430 kg
In Quarter 3, there is an excess inventory from the previous quarter, so no additional purchases are required. Therefore, the direct materials purchases budget for 2022 is as follows:
- Quarter 1: 30,380 kg
- Quarter 2: 10,920 kg
- Quarter 3: 0 kg
- Quarter 4: 4,430 kg
These quantities represent the raw materials Waterway Industries should purchase each quarter to meet production requirements and maintain the desired inventory levels.