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Crest has an ending finished goods inventory policy of 30% of the next month's sales...

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Accounting

Crest has an ending finished goods inventory policy of 30% of the next month's sales needs. September 1 inventory is projected to be 7,900 units. Each finished unit requires 2 units of Component X and 3 units of Component Z. August 1 materials inventory includes 4,000 units of Component X and 186,000 units of Component Z. Crest desires to maintain a Component X inventory equal to 10% of next month's production needs and a Component Z inventory equal to 20% of next month's production needs.

purchases budget for Component Z for quarter ending December 31. Assume a desired ending inventory for Component Z of 11,000 units at December 31, and a constant unit cost of $4 per lb.

Crest Products Direct Materials Purchases Budget (Component Z) For the Quarter Ending December 31
October November December Total
Budgeted production (units) 20,590 25,360 25,180 71,130
Direct materials requirements per unit
Total direct material needed
Plus: Ending inventory 11,000
Less: Beginning inventory (12,354) (15,216) (15,108) 12,354
Total purchases of Component Z
Cost of Component Z
Budgeted cost of Component Z purchases $848,144

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