Selva Inc. makes keyboards for tablets and packages them in crates containing 50 keyboards per crate. Planned
Question:
Selva Inc. makes keyboards for tablets and packages them in crates containing 50 keyboards per crate. Planned production in units for the first three months of the coming year is:
January 43,800
February 41,000
March 50,250
Each keyboard requires two liters of chemicals and one plastic crate. Company policy requires that ending inventories of raw materials for each month be 15 percent of the next month’s production needs. That policy was met for the ending inventory of December in the prior year. The cost of one liter of chemicals is $0.50. The cost of one crate is $1.60. (Note: Round all dollar amounts to the nearest dollar.)
1. Calculate the ending inventory of chemicals in liters for December of the prior year, and for January and February. What is the beginning inventory of chemicals for January?
2. Prepare a direct materials purchases budget for chemicals for the months of January and February.
Cornerstones of Managerial Accounting
ISBN: 978-0176530884
2nd Canadian edition
Authors: Maryanne M. Mowen, Don Hanson, Dan L. Heitger, David McConomy, Jeffrey Pittman