Problem 2. Tyrion Company has the following budgeted production for the 2nd quarter ending in June 30. April May June Quarter Budgeted Production 40,000 50,000 60,000 150,000 Each unit requires 3 pounds of raw material that costs $5.00 per pound. Management desires to end each month with an inventory of raw materials equal to 20% of the following month's ntion noode Tho docirod inver for June ie 40 .000 pounde Monogeme nlane

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Problem 2.
Tyrion Company has the following budgeted production for the 2nd quarter ending in June 30.
April
May
June
Quarter
Budgeted Production 40,000
50,000
60,000
150,000
Each unit requires 3 pounds of raw material that costs $5.00 per pound. Management desires to
end each month with an inventory of raw materials equal to 20% of the following month's
production needs. The desired ending inventory for June is 40,000 pounds. Management plans
to pay for 60% of raw material purchases in the month acquired and 40% in the following
month.
In addition, the beginning raw materials inventory for April is budgeted to be 24,000 pounds and
the beginning accounts payable for the April is budgeted to be $50,820.
Required:
a. Prepare the company's direct materials budget and schedule of expected cash
disbursements for purchases of materials for the 2nd quarter ending in June.
b. If the actual cost of material purchased is $4.5 per pound and 4 pounds of raw
materials were purchased to manufacture each unit of product. Compute the
materials price variance for one unit of product from the budgeted standard.
Transcribed Image Text:Problem 2. Tyrion Company has the following budgeted production for the 2nd quarter ending in June 30. April May June Quarter Budgeted Production 40,000 50,000 60,000 150,000 Each unit requires 3 pounds of raw material that costs $5.00 per pound. Management desires to end each month with an inventory of raw materials equal to 20% of the following month's production needs. The desired ending inventory for June is 40,000 pounds. Management plans to pay for 60% of raw material purchases in the month acquired and 40% in the following month. In addition, the beginning raw materials inventory for April is budgeted to be 24,000 pounds and the beginning accounts payable for the April is budgeted to be $50,820. Required: a. Prepare the company's direct materials budget and schedule of expected cash disbursements for purchases of materials for the 2nd quarter ending in June. b. If the actual cost of material purchased is $4.5 per pound and 4 pounds of raw materials were purchased to manufacture each unit of product. Compute the materials price variance for one unit of product from the budgeted standard.
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