Question

In: Accounting

Willison Company produces stuffed toy animals; one of these is Betty Rabbit. Each rabbit takes 0.2 metres of fabric and 0.1 kilograms of polyester fibre filling.

Willison Company produces stuffed toy animals; one of these is Betty Rabbit. Each rabbit takes 0.2 metres of fabric and 0.1 kilograms of polyester fibre filling. Fabric costs R35 per metre, and polyester fibre filling is R0.50 per gram. Willison has budgeted production of stuffed rabbits for the next four months (2020 – 2021) as follows:

Units

October
20 000

November
40 000

December
25 000

January
30 000

Inventory policy requires that sufficient fabric be in ending monthly inventory to satisfy 15% of the following month’s production needs and sufficient polyester fibre filling be in inventory to satisfy 30% of the following month’s production needs.

Inventory of fabric and polyester fibre filling at the beginning of October equal exactly the amount needed to satisfy the inventory policy.

Each rabbit produced requires (on average) 0.10 direct labour per hour. The average cost of direct labour is R155.00 per hour.

Required:

1.1 Prepare the direct materials purchases budget for the last quarter of 2020.        

Solutions

Expert Solution

Note - polyester fibre filling is R0.50 per gram.

Therefore Cost of 1 Kilogram of Polyester = 1000*0.50

= R500 Per Kilpgram

ekkarill92 answered 2 years ago
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