Question

Direct Materials Purchases Budget: Direct Labor Budget Crescent Company produces stuffed toy animals; one of these is "Arabeau the Cow." Each Arabeau takes 0.20 yard of fabric (white with irregular black splotches) and eight ounces of polyfiberfill. Fabric costs $3.50 per yard and polyfiberfill is $0.05 per ounce. Crescent has budgeted production of Arabeaus for the next four months as follows Units 42,000 90,000 50,000 40,000 October November December anuary Inventory policy requires that sufficient fabric be in ending monthly inventory to satisfy 20 percent of the following month's production needs and sufficient polyfiberfill be in inventory to satisfy 40 percent of the following month's production needs. Inventory of fabric and polyfiberfill at the beginning of October equals exactly the amount needed to satisfy the inventory policy Each Arabeau produced requires (on average) 0.10 direct labor hour. The average cost of direct labor is $15 per hour Required 1. Prepare a direct materials purchases budget of fabric for the last quarter of the year showing purchases in units and in dollars for each month and for the quarter in total. Round your answers to the nearest cent, if required Crescent Company Direct Materials Purchases Budget for Fabric For the Fourth Ouarter

Answer 1

Crescent company Direct Material Purchase Budget for fabric October November December Total Units produced Multiply Direct material per unit Production needs Add Desired Ending Material Inv Total needed Less Beginning Inventory Direct material Purchases Multiply Cost per yard Total purchase cost 42000 0.2 8400 3600 12000 1680 10320 3.5 36,120$ 90000 0.2 18000 2000 20000 36001 164001 3.5 57,400$ 50000 0.2 10000 1600 11600 2000 9600 3.5 33,600$ 182000 0.2 36400 7200 43600 7280 36320 3.5 127,120 $ $ $ $ $ Working Ending raw material Inventory 20 % of next months production needs Sep 20 % of Oct's production needs Oct =20 % of Nov's production needs Nov =20 % of Dec's production needs Dec =20 % of Jan's production needs 8400 x 20% = 1680 18000 x 20% = 3600 10000 x 20% = 2000 (40000 x 0.2) x 20% = 1600 Beginning raw Material Inventory Last Months Ending Inventory is Current months beginning Inventory Crescent company Direct Material Purchase Budget for Polyfiberfill October November December Total 900001 50000 42000 8 8 8 182000 8 1456000 100000 576000 Units produced Multiply Direct material per unit Production needs Add Desired Ending Material Inv Total needed Less Beginning Inventory Direct material Purchases Multiply Cost per yard Total purchase cost 336000 288000 6240001 134400 489600 0.05 24,480 $ 720000 160000 880000 288000 5920001 0.05 29,600$ 128000 528000 160000 368000 0.05 18,400$ 2032000 582400 1449600 us S $ $ 0.05 72,480 $ Working Ending raw material Inventory 40% of next months production needs Sep=40 % of Oct's production needs Oct -40% of Nov's production needs Nov -40% of Dec's production needs Dec 40 % of Jan's production needs 336000 x 40% = 134400 720000 x 40% = 288000 400000 x 40% = 160000 (40000 x 8) x 40% = 128000 Beginning raw Material Inventory Last Months Ending Inventory is Current months beginning Inventory Units produced Multiply Direct Labor time per unit Direct labor hour needed Multiply cost per direct labor hour Total Direct labor Cost Crescent company Direct Labor Budget October 42,000 0.10 4200 15S 63,000 $ November 90,000 0.10 9000 15$ 135,000 $ December 50,000 0.10 5000 15$ 75,000 $ Total 182,000 0.10 18200 15 273,000 $ $ Multiply number of units to be produced with DLH per unit, we get total hours required. To calculate DL cost, multiply hours required with rate hour hour.