Answer:
Direct material budget (in pounds)= 588,125
Direct material budget ($)= $941,000
Explanation:
Giving the following information:
Production= 730,000 candles
Direct material required for each unit:
13 ounces of wax
The estimated January 1 wax inventory is 18,600 pounds.
The desired January 31 wax inventory is 13,600 pounds.
Candle wax costs $1.60 per pound.
The direct material purchases are determined by the production requirements, the beginning inventory, and the ending inventory.
First, we need to calculate the amount of wax for the period:
Production= 730,000 candles*13 ounces= 9,490,000 ounces
In pounds= 9,490,000/16= 593,125 pounds.
Direct material budget (in pounds)= Production for the month + ending inventory - beginning inventory
Direct material budget (in pounds)= 593,125 + 13,600 - 18,600= 588,125
Direct material budget ($)= 588,125*1.6= $941,000
