Becker Bikes manufactures tricycles. The company expects to sell 390 units in May and 520 units in June. Beginning and ending finished goods for May are expected to be 115 and 80 units, respectively. June's ending finished goods are expected to be 90 units. Each unit requires 3 wheels at a cost of $9 per wheel. Becker requires 20 percent of next month's material production needs on hand each month, July's production units are expected to be 490 units. Compute Becker's direct materials purchases budget with respect to wheels for May and June.
Becker Bikes manufactures tricycles. The company expects to sell 390 units in May and 520 units in June. Beginning and ending finished goods for May are expected to be 115 and 80 units, respectively. June's ending finished goods are expected to be 90 units. Each unit requires 3 wheels at a cost of $9 per wheel. Becker requires 20 percent of next month's material production needs on hand each month, July's production units are expected to be 490 units. Compute Becker's direct materials purchases budget with respect to wheels for May and June.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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