Micro Products, Inc., has developed a very powerful electronic - 17428

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Micro Products, Inc., has developed a very powerful electronic calculator. Each calculator requires three small “chips” that cost $2 each and are purchased from an overseas supplier. Micro Products has prepared a production budget for the calculator by quarters for Year 2 and for the first quarter of Year 3, as shown below:



Year 2


Year 3

  First Second Third Fourth   First  
  Budgeted production, in calculators 60,000   90,000   150,000   100,000     80,000    


    The chip used in production of the calculator is sometimes hard to get, so it is necessary to carry large inventories as a precaution against stockouts. For this reason, the inventory of chips at the end of a quarter must equal 20% of the following quarter’s production needs. A total of 36,000 chips will be on hand to start the first quarter of Year 2.



Prepare a direct materials budget for chips, by quarter and in total, for Year 2. (Do not round intermediate calculations. Input all amounts as positive values. Omit the "$" sign in your response.)

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Ch8 Q3.docx
Ch8 Q3.docx