Direct Materials Purchases Budget Killings worth Publishers Inc. budgeted produc

Question

Direct Materials Purchases Budget Killings worth Publishers Inc. budgeted production of 60,000 diaries in 2016. Paper is required to produce a diary. Assume 88 square yards of paper arc required for each diary. The estimated January 1, 2016, paper inventory is 317,000 square yards. The desired December 31, 2016, paper inventory is 185,000 square yards. If paper costs $0.09 per square yard, determine the direct materials purchases budget for 2016. If required, round your final answer to the nearest dollar. $

Explanation / Answer

Statement showing computations Particulars Amount Budgeted Production in Diaries               60,000.00 Sq Yard of paper required to assemble one diary                    88.0000 Sq Yard of paper reqd for Budgeted Prod'n = 60,000*88         5,280,000.00 EndinG Inventory required            185,000.00 Total paper inventory reqd in Sq Yards = 5.28m + .185m         5,465,000.00 Less Beginning Inventory          (317,000.00) Inventory to be purchased I Sq yards = 5.465m - .317m         5,148,000.00 Costs per yard                         0.09 Total Cost of material purchases            463,320.00

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