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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

Magnolia Candle Inc. budgeted production of 74,200 candles in 20Y4. Wax is required to produce a candle. Assume that eight ounces (one-half of a pound) of wax is required for each candle. The estimated January 1, 20Y4, wax inventory is 2,500 pounds. The desired December 31, 20Y4, wax inventory is 2,100 pounds. If candle wax costs $4.10 per pound, determine the direct materials purchases budget for 20Y4.

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 20Y4.

Explanation

Calculate the direct materials purchases budget for 20Y4.

M Incorporation

Direct Materials Purchases Budget

For the year ending December 31, 20Y4

Particulars Units
Pounds required for production:
Candles 37,100(1)
Add: Desired ending inventory, December 31, 20Y4 2,100
Total Pounds required 39,200
Less: Estimated beginning inventory, January 1, 20Y4 (2,500)
Total Pounds To Be Purchased (A) 36,700
Unit price per pound (B) $4...

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