Question: Refer to information from Exercise. Each transmission requires 0.60 pounds of a key raw material. Nascar 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 $175 per unit. Prepare a direct materials budget for the second quarter.
Exercise: Nascar Company manufactures an innovative automobile transmission for electric cars. Management predicts that ending inventory for the first quarter will be 37,500 units. The following unit sales of the transmissions are expected during the rest of the year: second quarter, 225,000 units; third quarter, 262,500 units; and fourth quarter, 237,500 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.