Refer to information from Exercise 22-8. Each transmission requires 0.80 pounds of a key raw material. Electro Company aims to end each quarter with an ending inventory of direct materials equal to 50% of next quarter’s budgeted materials requirements. Direct materials cost $ 170 per unit. Prepare a direct materials budget for the second quarter.
In Exercise 22-8, Electro Company manufactures an innovative automobile transmission for electric cars. Management predicts that ending inventory for the first quarter will be 75,000 units. The following unit sales of the trans-missions are expected during the rest of the year: second quarter, 450,000 units; third quarter, 525,000 units; and fourth quarter, 475,000 units. Company policy calls for the ending inventory of a quarter to equal 20% of the next quarter’s budgeted sales. Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture.