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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Direct materials purchases budget

Daybook Inc. budgeted production of 403,500 personal journals in 20Y6. Paper is required to produce a journal. Assume six square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 40,400 square yards. The desired December 31, 20Y6, paper inventory is 38,900 square yards. If paper costs $0.40 per square yard, determine the direct materials purchases budget for 20Y6.

To determine

Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities.

To Calculate: The direct materials purchases budget for 20Y6.

Explanation

Calculate the direct materials purchases budget for 20Y6.

D Incorporation

Direct Materials Purchases Budget

For the year ending December 31, 20Y6

Particulars Units
Square yards required for production:
Personal journals 2,421,000(1)
Add: Desired ending inventory, December 31, 20Y6 38,900
Total Square yards required 2,459,900
Less: Estimated beginning inventory, January 1, 20Y6 (40,400)
Total Square Yards To Be Purchased (A) 2,419,500
Unit price per square yard (B) $0...

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