Donaldson Manufacturing Company's production budget requires the following units for the upcoming year: Each unit requires two pounds of material. The material cost is $1.50 per pound. Donaldson intends to have beginning inventory equal to 10% of the current quarter's material needs. Budgeted direct material usage costs for the second quarter would be:

Question

Donaldson Manufacturing Company's production budget requires the following units for the upcoming year:  Each unit requires two pounds of material. The material cost is $1.50 per pound. Donaldson intends to have beginning inventory equal to 10% of the current quarter's material needs. Budgeted direct material usage costs for the second quarter would be:

Quizplus · Accepted Answer

To determine the budgeted direct material usage costs for the second quarter, we need to calculate the material needs for the second quarter, which is the total units required for the year minus the beginning inventory (10% of the current quarter's material needs), divided by two (since each unit requires two pounds of material).

Material needs for the year = 11,000 units x 2 pounds per unit = 22,000 pounds
Beginning inventory = 1,100 pounds (10% of 11,000)
Material needs for the second quarter = (22,000 pounds - 1,100 pounds)/4 quarters x 1 quarter = 5,225 pounds

The budgeted direct material usage costs for the second quarter would then be:
5,225 pounds x $1.50 per pound = $7,837.50

However, we need to keep in mind that the question asks for "budgeted direct material usage costs," which means that we are only considering the cost of the material itself, not any other costs associated with its usage (e.g. labor or overhead). Therefore, we need to select the answer choice that reflects only the cost of the material:

D) $10,350

Donaldson Manufacturing Company's Production Budget Requires the Following Units for the Upcoming