Tangshang Industries production budget from the 2nd quarter

Tangshang Industries production budget from the 2^nd quarter of 2018, projected the following amounts of units to be produced:

April 1,000 units

May     1,200 units

June     1,250 units

Each unit requires 2 parts of component A and 3 parts of component B. Component A cost is $1.25 per unit and component B cost is $.80 per unit.

Calculate the Direct Material budgeted cost for May 2018

Calculate the Direct Material budgeted cost for the quarter April - June 2018

The raw materials inventory policy is 0 ending inventory, 0 beginning inventory. How much inventory of component A is required in April 2018?

Solution

a)Direct Material budgeted cost for May 2018 =( unit produced for may * component A*cost )+(unit produced for may * component A*cost ))

(1200 * 2 *1.25)+(1200*3*.80)

3000+ 2880

5880

b)Total unit produced = 1000+1200+1250=3450

Direct Material budgeted cost for the quarter April - June 2018 =[3450*2*1.25]+[3450*3*.80]

    = 8625+ 8280

    = $ 16905

c)inventory of component A is required in April 2018 =Unit produced in april *requirement

      = 1000*2

      = 2000 components