Question

Camera Crawlers manufactures picture frames. Sales for December are expected to be 10,000 units of various sizes. Historically, the average frame requires four metres of framing, two square metre of glass, and four square metres of backing. Beginning inventory includes 1200 metre of framing, 800 square metres of glass, and 600 square metres of backing. Current prices are $1.00 per metre of framing, $5.00 per square metre of glass, and $3.00 per square metre of backing. Ending inventory should be 150% of beginning inventory. Purchases are paid for in the month acquired.

5

Required:

1. Determine the quantity of framing, glass, and backing that is to be purchased during December.                                                                                          (10 marks)

2. Determine the total costs of direct materials for December purchases.                   

                                        (10 marks)

Answer 1

--Requirement [a]

Working		Framing	Glass	Backing
A	Expected sales	10,000	10,000	10,000
B	Requirement per unit	4	2	4
C = A x B	Total requirement [square feet]	40,000	20,000	40,000
D	Beginning Inventory available	1,200	800	600
E = D x 150%	Ending inventory desired	1,800	1,200	900
F = C + E - D	Quantity to be purchased	40,600	20,400	40,300

--Requirement [b]

Working		Framing	Glass	Backing	TOTAL
A	Quantity to be purchased	40,600	20,400	40,300
B	Price per unit	$                   1.00	$                     5.00	$               3.00
C = A x B	Total cost of purchase	$        40,600.00	$        102,000.00	$ 120,900.00	$ 263,500.00