Graham Corporation's budgeted production schedule, by quarters, for the coming year is as follows:
Quarter 1 = 22,500 units
Quarter 2 = 19,000 units
Quarter 3 = 17,000 units
Quarter 4 = 24,000 units
Each unit of product requires three pounds of direct material. The company's policy is to begin each quarter with 30% of that quarter's direct materials production requirements.
Graham expects to have 50,000 pounds of direct materials on hand at the beginning of Quarter 1.
What would be Graham's budgeted direct materials purchases (in pounds) for the third quarter?

Question

Quizplus · Accepted Answer

To calculate the budgeted direct materials purchases for the third quarter, first determine the direct materials required for production: 17,000 units x 3 pounds/unit = 51,000 pounds. The company needs to start the quarter with 30% of the next quarter's requirement: 24,000 units x 3 pounds/unit x 30% = 21,600 pounds. Therefore, total materials needed for the third quarter = 51,000 + 21,600 = 72,600 pounds. Subtract the beginning inventory for the third quarter (30% of 51,000 pounds = 15,300 pounds) to find the purchases: 72,600 - 15,300 = 57,300 pounds.

Graham Corporation's Budgeted Production Schedule, by Quarters, for the Coming