Question

Ornamental sculptures MFG. manufactures garden sculptures. Each sculpture requires 8 pounds of direct materials at a cost of $2 per pound and 0.4 direct labor hours at a rate of $15 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $3,900 per month. THe company's policy is to maintain direct materials inventory equal to 20% of the next month's materials requirement. At the end of february the company had 6,180 pounds of direct materials in inventory. The company production budget reports the following:
Production Budget March April May
Units to be produced 4,100 4,700 5,500

Required:
Prepare direct materials budgets for March and April.

Answer 1

Answer:

Results are below.

Explanation:

Giving the following information:

Each sculpture requires 8 pounds of direct materials for $2 per pound

The company's policy is to maintain direct materials inventory equal to 20% of the next month's materials requirement.

Beginning inventory= 6,180 pounds

To calculate direct material purchases, we need to use the following formula:

Purchases= production + desired ending inventory - beginning inventory

March:

Purchases= 4,100*8 + (4,700*8)*0.2 - 6,180

Purchases= 34,140 pounds

Direct material busget= 34,140*2= $68,280

April:

Purchases= 4,700*8 + (5,500*8)*0.2 - 7,520

Purchases= 38,880

Direct material budget= 38,880*2= $77,760