Question - Direct Materials Purchases Budget
Roehler Industrial has estimated that production for the next five quarters will be:
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Production Information
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1st Quarter, 2011
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41,000 units
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2nd Quarter, 2011
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37,000 units
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3rd Quarter, 2011
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44,000 units
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4th Quarter, 2011
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36,000 units
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1st Quarter, 2012
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43,000 units
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Finished units of production require 10 pounds of raw material per unit. The raw material cost is $7 per pound. There are 77,900 pounds of raw material on hand at the beginning of the first quarter, 2011. Roehler desires to have 19 percent of next quarter's material requirements on hand at the end of each quarter.
Prepare quarterly direct materials purchases budgets for Roehler Industrial for 2011.