Direct Materials Purchases Budget Soft Glow Candle Inc. budgeted production of 96,800 candles in 20Y4. Wax is required to produce a candle. Assume that 8 ounces (one-half of a pound) of wax is required for each candle. The estimated January 1, 20Y4, wax inventory is 3,100 pounds. The desired December 31, 20Y4, wax inventory is 5,200 pounds. If candle wax costs $3.80 per pound, determine the direct materials purchases budget for 20Y4.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Direct Materials Purchases Budget
Soft Glow Candle Inc. budgeted production of 96,800 candles in 20Y4. Wax is required to produce a candle. Assume that 8 ounces (one-half of a pound) of wax is required for each candle. The estimated January 1, 20Y4, wax inventory is 3,100 pounds. The desired December 31, 20Y4, wax inventory is 5,200 pounds.
If candle wax costs $3.80 per pound, determine the direct materials purchases budget for 20Y4.
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