Question

Beckeers bikes manufactures tricycles. the company expects to sell 400 units in may and 530 in June. beginning and ending finished goods for may is expected to be 120 and 85 units, respectively. june's ending finished goods is expected to be 95 units. each unit requires 3 wheels at a cost of $10 per wheel. Becker requires 20 percent of next month's material production needs on hand each month. July's production units is expected to be 500 units.

compute becker's direct materials purchases budget with respect to wheels for may and june.

Answer 1

Direct Material Purchases Budget May $ 14190

Direct Material Purchases Budget June $19200

Step-by-step explanation:

Beckeers Bikes Manufacturers

May June July

Sales 400 530

+ Ending Inventory 85 95

Less Beg. Inventory 120 85

Production Budget 365 540 500 (given)

Wheels per unit 3 3 3

Total Wheels 1095 1620 1500

Cost per wheel $ 10 $ 10 $ 10

Total Cost $ 10950 $ 16200 $ 15000

On hand(20% 0f

next month's production) $3240 $ 3000

Direct Material

Purchases Budget $ 14190 $19200

First we find the total production required each month . Then we find the costs. After that we find the Purchases including the on hand inventory.