Micro Products, Inc., has developed a very powerful electronic calculator. Each calculator requires

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.

   

Required:

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.)

   

Micro Products, Inc. Direct Materials Budget - Year 2
	Quarter
	First	Second	Third	Fourth	Year
Required production in calculators	60,000	90,000	150,000	100,000	400,000
Number of chips per calculator	×  3	×  3	×  3	×  3	×  3
Production needs—chips	180,000	270,000	450,000	300,000	1,200,000
Add : Ending inventory	54,000	90,000	60,000	48,000	48,000
Total needs	234,000	360,000	510,000	348,000	1,248,000
Deduct : Beginning inventory	36,000	54,000	90,000	60,000	36,000
Required purchases—chips	198,000	306,000	420,000	288,000	1,212,000
Total cost of purchases	$ 396,000	$ 612,000	$ 840,000	$ 576,000	$ 2,424,000