Exercise 8.17 Direct Materials Purchases Budget: Direct Labor Budget Crescent Co
ID: 2490550 • Letter: E
Question
Exercise 8.17
Direct Materials Purchases Budget: Direct Labor Budget
Crescent Company produces stuffed toy animals; one of these is “Arabeau the Cow.” Each Arabeau takes 0.20 yard of fabric (white with irregular black splotches) and eight ounces of polyfiberfill. Fabric costs $3.50 per yard and polyfiberfill is $0.05 per ounce. Crescent has budgeted production of Arabeaus for the next four months as follows:
Inventory policy requires that sufficient fabric be in ending monthly inventory to satisfy 20 percent of the following month’s production needs and sufficient polyfiberfill be in inventory to satisfy 40 percent of the following month’s production needs. Inventory of fabric and polyfiberfill at the beginning of October equals exactly the amount needed to satisfy the inventory policy.
Each Arabeau produced requires (on average) 0.10 direct labor hour. The average cost of direct labor is $15 per hour.
Required:
1. Prepare a direct materials purchases budget of fabric for the last quarter of the year showing purchases in units and in dollars for each month and for the quarter in total. Round your answers to the nearest cent, if required.
Crescent Company
Direct Materials Purchases Budget for Fabric
For the Fourth Quarter
October
November
December
Total
Units produced
Correct 9 of Item 1
Correct 10 of Item 1
Correct 11 of Item 1
Correct 12 of Item 1
DM per unit (yd.)
Correct 14 of Item 1
Correct 15 of Item 1
Correct 16 of Item 1
Correct 17 of Item 1
Production needs
Correct 19 of Item 1
Correct 20 of Item 1
Correct 21 of Item 1
Correct 22 of Item 1
Desired ending inventory (yd.)
Correct 24 of Item 1
Correct 25 of Item 1
Correct 26 of Item 1
Correct 27 of Item 1
Total needed
Correct 29 of Item 1
Correct 30 of Item 1
Correct 31 of Item 1
Correct 32 of Item 1
Less: Beginning inventory
Correct 34 of Item 1
Correct 35 of Item 1
Correct 36 of Item 1
Correct 37 of Item 1
DM to be purchased (yd.)
Correct 39 of Item 1
Correct 40 of Item 1
Correct 41 of Item 1
Correct 42 of Item 1
Cost per yard
Correct 44 of Item 1
Correct 45 of Item 1
Correct 46 of Item 1
Correct 47 of Item 1
Total purchase cost
Correct 49 of Item 1
Correct 50 of Item 1
Correct 51 of Item 1
Correct 52 of Item 1
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2. Prepare a direct materials purchases budget of polyfiberfill for the last quarter of the year showing purchases in units and in dollars for each month and for the quarter in total. Round your answers to the nearest cent, if required.
Crescent Company
Direct Materials Purchases Budget for Polyfiberfill
For the Fourth Quarter
October
November
December
Total
Units produced
Correct 9 of Item 2
Correct 10 of Item 2
Correct 11 of Item 2
Correct 12 of Item 2
DM per unit (oz.)
Correct 14 of Item 2
Correct 15 of Item 2
Correct 16 of Item 2
Correct 17 of Item 2
Production needs
Correct 19 of Item 2
Correct 20 of Item 2
Correct 21 of Item 2
Correct 22 of Item 2
Desired ending inventory (oz.)
Correct 24 of Item 2
Correct 25 of Item 2
Correct 26 of Item 2
Correct 27 of Item 2
Total needed
Correct 29 of Item 2
Correct 30 of Item 2
Correct 31 of Item 2
Correct 32 of Item 2
Less: Beginning inventory
Correct 34 of Item 2
Correct 35 of Item 2
Correct 36 of Item 2
Correct 37 of Item 2
DM to be purchased (oz.)
Correct 39 of Item 2
Correct 40 of Item 2
Correct 41 of Item 2
Correct 42 of Item 2
Cost per ounce
Correct 44 of Item 2
Correct 45 of Item 2
Correct 46 of Item 2
Correct 47 of Item 2
Total purchase cost
Correct 49 of Item 2
Correct 50 of Item 2
Correct 51 of Item 2
Correct 52 of Item 2
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Solution
3. Prepare a direct labor budget for the last quarter of the year showing the hours needed and the direct labor cost for each month and for the quarter in total. Round your answers to the nearest cent, if required.
Crescent Company
Direct Labor Budget
For the Fourth Quarter
October
November
December
Total
Units produced
Correct 9 of Item 3
Correct 10 of Item 3
Correct 11 of Item 3
Correct 12 of Item 3
Direct labor time per unit (hours)
Correct 14 of Item 3
Correct 15 of Item 3
Correct 16 of Item 3
Correct 17 of Item 3
Direct labor hours needed
Correct 19 of Item 3
Correct 20 of Item 3
Correct 21 of Item 3
Correct 22 of Item 3
Cost per direct labor hour
Correct 24 of Item 3
Correct 25 of Item 3
Correct 26 of Item 3
Correct 27 of Item 3
Total direct labor cost
Correct 29 of Item 3
Correct 30 of Item 3
Correct 31 of Item 3
Correct 32 of Item 3
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Hide1. Prepare a direct materials purchases budget of fabric for the last quarter of the year showing purchases in units and in dollars for each month and for the quarter in total. Round your answers to the nearest cent, if required.
Crescent Company
Direct Materials Purchases Budget for Fabric
For the Fourth Quarter
October
November
December
Total
Units produced
Correct 9 of Item 1
Correct 10 of Item 1
Correct 11 of Item 1
Correct 12 of Item 1
DM per unit (yd.)
Correct 14 of Item 1
Correct 15 of Item 1
Correct 16 of Item 1
Correct 17 of Item 1
Production needs
Correct 19 of Item 1
Correct 20 of Item 1
Correct 21 of Item 1
Correct 22 of Item 1
Desired ending inventory (yd.)
Correct 24 of Item 1
Correct 25 of Item 1
Correct 26 of Item 1
Correct 27 of Item 1
Total needed
Correct 29 of Item 1
Correct 30 of Item 1
Correct 31 of Item 1
Correct 32 of Item 1
Less: Beginning inventory
Correct 34 of Item 1
Correct 35 of Item 1
Correct 36 of Item 1
Correct 37 of Item 1
DM to be purchased (yd.)
Correct 39 of Item 1
Correct 40 of Item 1
Correct 41 of Item 1
Correct 42 of Item 1
Cost per yard
$Correct 44 of Item 1
$Correct 45 of Item 1
$Correct 46 of Item 1
$Correct 47 of Item 1
Total purchase cost
$Correct 49 of Item 1
$Correct 50 of Item 1
$Correct 51 of Item 1
$Correct 52 of Item 1
Explanation / Answer
Ans;
Budgeted Direct Material Cost Budget [Fabric]
October
November
December
Quarter
Budgeted Production [i]
42000
90000
50000
182000
Budgeted units required [ii = 0.2*i]
8400
18000
10000
36400
Budgeted Cost of Units[iii = 3.5*ii]
29400
63000
35000
127400
(+) Closing Inventory
12600
7000
5600
5600
(-) Opening Inventory
5880
12600
7000
5880
TOTAL BUDGETED COST
36120
57400
33600
127120
Budgeted Direct Material Cost Budget [Polyfiberfill]
October
November
December
Quarter
Budgeted Production [i]
42000
90000
50000
182000
Budgeted units required [ii = 8*i]
336000
720000
400000
1456000
Budgeted Cost of Units[iii = 0.05*ii]
16800
36000
20000
72800
(+) Closing Inventory
14400
8000
6400
6400
(-) Opening Inventory
6720
14400
8000
6720
TOTAL BUDGETED COST
24480
29600
18400
72480
Budgeted Direct Labor
October
November
December
Quarter
Budgeted Production [i]
42000
90000
50000
182000
Budgeted Labor Hours [ii = 0.1*i]
4200
9000
5000
18200
Budgeted Cost [iii = ii*15]
63000
135000
75000
273000
Budgeted Direct Material Cost Budget [Fabric]
October
November
December
Quarter
Budgeted Production [i]
42000
90000
50000
182000
Budgeted units required [ii = 0.2*i]
8400
18000
10000
36400
Budgeted Cost of Units[iii = 3.5*ii]
29400
63000
35000
127400
(+) Closing Inventory
12600
7000
5600
5600
(-) Opening Inventory
5880
12600
7000
5880
TOTAL BUDGETED COST
36120
57400
33600
127120
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