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Question - Swisher Toys is preparing its budget for 2017. Production for the first quarter is expected to be 600,000 toy dump trucks. Production for the subsequent quarters will be 625,000 trucks, 700,000 trucks, and 850,000 trucks.
Each truck requires 3.0 pounds of resin, which is used to produce the trucks. Each pound of resin costs $0.50. Swisher will have 325,000 pounds of resin on hand at the end of 2017 and wants to have 500,000 pounds of resin in inventory at the end of 2018. Ending inventory for resin for the first, second, and third quarters will be 340,000 pounds, 360,000 pounds, and 450,000 pounds.
Prepare the direct materials budget by quarter and in total for 2018.
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