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EE 6-3 p.240 PE 6-3A Direct materials purchases budget OBJ. 4 MyLife Chronicles Inc. budgeted production of 238.900 diaries i

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Answer #1

Total square yards of paper required for 238,900 diaries = 238900*5 = 1194500

(A) Paper required for budgeted production = 1194500 sq. yards

(B) Less: opening inventory = 32400 sq. yards

(C) Add: closing inventory = 30800 sq yards

(D) Net paper purchased (A-B+C) = 1192900 sq. yards

cost of paper per yard = $ 0.3

cost of 1192900 sq. yards = $ 0.3 * 1192900 = $ 357870

So, the direct material purchase budget for 2016 is $ 357870

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