Killingsworth Publishers Inc. budgeted production of 59,000 diaries in 2016. Pap

Question

Killingsworth Publishers Inc. budgeted production of 59,000 diaries in 2016. Paper is required to produce a diary. Assume 83 square yards of paper are required for each diary. The estimated January 1, 2016, paper inventory is 343,000 square yards. The desired December 31, 2016, paper inventory is 269,000 square yards.

If paper costs $0.11 per square yard, determine the direct materials purchases budget for 2016. If required, round your final answer to the nearest dollar.

$_____???

Can someone please help me with this question?

Explanation / Answer

closing inventory - paper 269000 Add : paper required for the production ( 83 * 59000) 4897000 Less : opening inventory - paper 343000 Production for the period 4823000 Cost per square yard 0.11 Total direct material purchase cost 530530 Hence total direct material cost $ 530350

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