Question

Soft and Silky, Inc. manufactures bedding sets. The budgeted production is for 53,000 comforters in 2017. Each comforter requires 6 yards of material. The estimated January 1, 2017, beginning inventory is 31,000 yards. The desired ending balance is 30,000 yards of material. If the material costs $1.50 per yard, determine the materials budget for 2017. a.$475,500 b.$385,500 c.$478,500 d.$477,000

Answer 1

Answer

Material purchase budget ($)= $475,500

Explanation:

The material purchases budget is determined by adding the the closing stock of materials to the material usage budget and subtracting the opening inventory of materials.

Material purchase budget= Material usage budget + closing inventory - opening inventory

Material usage budget = Production budget × standard quantity per unit

                                   = 53,00 ×  6 yards =  318,000

Material purchase budget(quantity) = 318000 +  30,000 -   31,000 = 317,000

Material purchase budget ($)  = Material purchase budget (in quantity) × standard price

                                        = 317,000× $1.50 = $475,500

Material purchase budget ($)= $475,500