Tango Ltd estimates their sales volume for quarter 1 is 30,233 units. The beginning materials inventory is $300 000 and the desired ending materials inventory is $240 000. The materials cost per unit is $60.

Calculate the budgeted direct materials cost for quarter 1.

Question

Tango Ltd estimates their sales volume for quarter 1 is 30,233 units. The beginning materials inventory is $300 000 and the desired ending materials inventory is $240 000. The materials cost per unit is $60.

Calculate the budgeted direct materials cost for quarter 1.

BlackTom AI · Accepted Answer

The question asks us to calculate the budgeted direct materials cost for quarter 1, given sales volume, beginning and ending inventories of materials, and the materials cost per unit.
First, determine the expected materials usage in units: 30,233 units are anticipated to be produced or sold, and since each unit requires 60 of currency units of materials, the total material consumption in cost terms is 30,233 × 60 = 1,813,980.
Next, relate purchases to usage and inventory levels. The budgeted purchases of materials (in cost terms) are calculated by: Purchases = Usage + Ending Inventory - Beginning Inventory. This accounts for the fact that some of the materials needed for the quarter come from the beginning inventory, while the desired ending inventory must be maintained.
Plugging in the numbers: Purchases = 1,813,980 + 240,000 − 300,000 = 1,753,980.
Therefore, the budgeted direct materials cost for quarter 1 should be 1,753,980.
If, for some reason, a provided answer shows 1,694,780, this would imply a different interpretation or data point, such as a variation in the unit cost, a different handling of the beginning/ending inventory, or a misprint in the inputs. Consider rechecking the given figures (units, cost per unit, and inventory levels) to reconcile the discrepancy.
In any case, the core reasoning hinges on: (1) compute usage from units × unit cost, (2) adjust for the change in inventory from beginning to ending, (3) report the resulting purchases cost for the quarter.

BACC011 Week 9: Practice Quiz

Tango Ltd estimates their sales volume for quarter 1 is 30,233 units. The beginning materials inventory is $300 000 and the desired ending materials inventory is $240 000. The materials cost per unit is $60. Calculate the budgeted direct materials cost for quarter 1.

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