In: Accounting
Purple Co.'s production budget for Product X for the year ended December 31 is as follows:
Product X | ||
Sales (in units) | 640,000 | |
Plus desired ending inventory | 85,000 | |
Total | 725,000 | |
Less estimated beginning inventory, January 1 | 90,000 | |
Total production | 635,000 |
In Purple's production operations, Materials A, B, and C are
required to make Product X.
The quantities of direct materials expected to be used for each
unit of product are as follows:
Material A | 0.50 lb. per unit |
Material B | 1.00 lb. per unit |
Material C | 1.20 lb. per unit |
The prices of direct materials are as follows:
Material A | $0.60 per lb. |
Material B | $1.70 per lb. |
Material C | $1.00 per lb. |
Prepare a direct materials purchases budget for Product X, assuming that there are no beginning or ending inventories for direct materials (all units purchased are used in production).
Direct Materials | |||||||
A | B | C | Total | ||||
Units required for production of Product X | lb. | lb. | lb. | ||||
Unit price | $ | $ | $ | ||||
Total direct materials purchases | $ | $ | $ |
Solution
Material | ||||
A | B | C | Total | |
Units required for production of Product X | 317500 | 635000 | 762000 | |
Unit price | $ 0.60 | $ 1.70 | $ 1.00 | |
Total direct materials purchases | $ 190,500.00 | $ 1,079,500.00 | $ 762,000.00 | $ 2,032,000.00 |
Working
Material | ||||
A | B | C | Total | |
Units to be produced | 635000 | 635000 | 635000 | |
Multiplied by: Pounds required per unit produced | 0.5 | 1 | 1.2 | |
Units required for production of Product X | 317500 | 635000 | 762000 | |
Multiplied by: Unit price | $ 0.60 | $ 1.70 | $ 1.00 | |
Total direct materials purchases | $ 190,500.00 | $ 1,079,500.00 | $ 762,000.00 | $ 2,032,000.00 |