Schaeffer Industries manufactures a popular interactive stuffed animal for children that require three computer chips inside each toy. Schaeffer Industries pays $2 for each computer chip. To help to guard against stockouts of the computer chip, Schaeffer Industries has a policy that states that the ending inventory of computer chips should be at least 30% of the following month's production needs. The production schedule for the first four months of the year is as follows:
________________________________________Stuffed animals to be produced
January ............................................................................... 5,100
February ............................................................................. 4,500
March ................................................................................. 4,100
April .................................................................................... 4,000
Requirement
Prepare a direct materials budget for the first quarter that shows both the number of computer chips needed and the dollar amount of the purchases in the budget.