3. Wrap Up Bangladesh makes and sells a product called a Miniwrap. One Miniwrap requires 1.5...

 

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3. Wrap Up Bangladesh makes and sells a product called a Miniwrap. One Miniwrap requires 1.5 kilograms of the raw material paper boards. Budgeted production of Miniwraps for the next five months is as follows: July August September October 24,500 units 24,700 units 24,600 units 26,400 units The company wants to maintain monthly ending inventories of paper boards equal to 30 percent of the following month's production needs. On June 31, this requirement was not met since only 10,400 kilograms of paper boards were on hand. The cost of paper boards is $4.00 per kilogram. The supplier offers credit facility for Wrap UP Bangladesh. According to the policy, Wrap Up Bangladesh would have to pay for 30 percent of the monthly purchase in cash and the rest would be on credit. Out of credit purchase-20 percent would have to be paid in the month of purchase, 50 percent in the month following purchase and the rest of the 30 percent in the second month following purchase. Wrap up cleared all it's due in June. Required: (7) a) Prepare a Direct material budget for the months covering third quarter. b) Prepare a schedule of expected cash disbursements for material for each month of third quarter. (8) 3. Wrap Up Bangladesh makes and sells a product called a Miniwrap. One Miniwrap requires 1.5 kilograms of the raw material paper boards. Budgeted production of Miniwraps for the next five months is as follows: July August September October 24,500 units 24,700 units 24,600 units 26,400 units The company wants to maintain monthly ending inventories of paper boards equal to 30 percent of the following month's production needs. On June 31, this requirement was not met since only 10,400 kilograms of paper boards were on hand. The cost of paper boards is $4.00 per kilogram. The supplier offers credit facility for Wrap UP Bangladesh. According to the policy, Wrap Up Bangladesh would have to pay for 30 percent of the monthly purchase in cash and the rest would be on credit. Out of credit purchase-20 percent would have to be paid in the month of purchase, 50 percent in the month following purchase and the rest of the 30 percent in the second month following purchase. Wrap up cleared all it's due in June. Required: (7) a) Prepare a Direct material budget for the months covering third quarter. b) Prepare a schedule of expected cash disbursements for material for each month of third quarter. (8)

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