Electro company manufactures an innovative automobile

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Reference no: EM13589232

Electro Company manufactures an innovative automobile transmission for electric cars. Management predicts that ending finished goods inventory for the first quarter will be 73,780 units. The following unit sales of the transmissions are expected during the rest of the year: second quarter, 217,000 units; third quarter, 503,000 units; and fourth quarter, 236,000 units. Company policy calls for the ending finished goods inventory of a quarter to equal 34% of the next quarter's budgeted sales. (Ending inventory for the first quarter does not comply with company policy.) Each transmission requires 0.55 pounds of a key raw material. Electro Company aims to end each quarter with an ending inventory of direct materials equal to 34% of next quarter's budgeted materials requirements. Direct materials cost $167 per unit.

Prepare a direct materials budget for the second quarter.

Reference no: EM13589232

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