Prepare a direct materials purchasing plan for January, February, and March, based on the following facts....
Prepare a direct materials purchasing plan for January, February, and March, based on the following facts.
Lana Gonzales owns a business that assembles ceiling fan units. Each fan requires one motor system and four blades. Motors cost $45 each, and blades are $4.00 each.
Lana is able to reliably obtain motors as needed, and does not maintain them in inventory. However, blades are stocked in inventory sufficient to produce 40% of the following month's expected production.
Planned production is as follows:
January 11,000
February 13,000
March 16,000
April 12,000
In accordance with the stocking plan, January's beginning inventory included 13,000 blades.
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| B. |
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| C. |
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| D. |
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| E. |
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Homework Answers
| Total Purchase cost | |||||
| Particulars | January | February | March | ||
| Purchase cost of blades | $ 207,200.00 | $ 227,200.00 | $ 230,400.00 | ||
| Purchase cost of motor | $ 495,000.00 | $ 585,000.00 | $ 720,000.00 | ||
| $ 702,200.00 | $ 812,200.00 | $ 950,400.00 | |||
| Answer: | Option E | ||||
Workings:
| R.M budget - blades | |||||||
| Particulars | January | February | March | April | |||
| Planned production | 11000 | 13000 | 16000 | 12000 | |||
| Blades req. per unit | 4 | 4 | 4 | 4 | |||
| Material req. for prod. | 44000 | 52000 | 64000 | 48000 | |||
| Add: | Desired ending inventory | 20800 | 25600 | 19200 | 0 | ||
| Less: | Beginning inventory | 13000 | 20800 | 25600 | |||
| Net units of blades req. | 51800 | 56800 | 57600 | ||||
| Cost per blade | $ 4.00 | $ 4.00 | $ 4.00 | ||||
| Purchase cost of blades | $ 207,200.00 | $ 227,200.00 | $ 230,400.00 | ||||
| R.M budget - motor | ||||||
| Particulars | January | February | March | April | ||
| Planned production | 11000 | 13000 | 16000 | 12000 | ||
| Motor req. per unit | 1 | 1 | 1 | 1 | ||
| Material req. for prod. | 11000 | 13000 | 16000 | 12000 | ||
| Cost per motor | $ 45.00 | $ 45.00 | $ 45.00 | |||
| Purchase cost of motor | $ 495,000.00 | $ 585,000.00 | $ 720,000.00 | |||
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