Question

Help System Announcements CALCULATOR PRINTER VERSION Brief Exercise 161 Smoke, Inc. makes and sells buckets. Each bucket uses 1/2 pound of plastic. Budgeted production of buckets in units for the next three months is as follow April May June Budgeted production 21,000 22,000 24,000 The company wants to maintain monthly ending inventories of plastic equal to 25% of the following month's budgeted production needs. The cost of plastic pound. Prepare a direct materins purchases budget for the month of May. (Enter negative amounts using either a negative sign preceding the number e.g. parentheses e.g. (45). Round pounds of plastic needed for each bucket to I decimal palce and cost per pound to two decimal palces.) Click if you would like to show Work for this question: Open Show Work Question Attempts: 0 of 1 used SAVE PO MacBook IP

cost of plastic is $2.20 per pound

Answer 1

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Ans of Exercise 161: Amount in $ In the book of Smoke Inc. Calculation of direct material purchase budget for the month of May: Buckets (units): Plastic per bucket (pound): Total plastic needed (pound): Add: Planned ending inventory: (w.n-1) Less: beginning inventory: (w.n-2) Plastic to be purchased: Plastic cost per pound Total plastic to purchase 22,000 0.50 11,000 3,000 2,750 11,250 2.20 24,750.00 $ $ Working Note-1: Calculation of planned ending inventory for the month of May: ending invenory for the month of May is 25% of budgeted production in June: i.e.: (24,000 bucket X 0.50 pound plastic per bucket) X 25% = 3,000 pound plastic Working Note-2: Calculation of beginning inventory for the month of May: beginning invenory for the month of May is the closing inventory of April. and ending invenory for the month of April is 25% of budgeted production in May: i.e.: (22,000 bucket X 0.50 pound plastic per bucket) X 25% = 2,750 pound plastic

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