Question

Glaziers Professional Corp. manufactures customized frames for pictures and certificates. Sales for August are expected to be 10,000 units of various sizes. The average frame requires:

Wood: 4 metres

Glass: One square metre

Backing: Two square metres

Beginning inventory includes 1,500 metres of framing, 500 square metres of glass, and 500 square metres of backing. Current prices are $0.30 per metre for framing, $6.00 per square metre for glass, and $2.25 per square metre of backing. Ending inventory should be 150% of beginning inventory. Purchases are paid for in the same month acquired.

Required:

a) Determine the quantity of framing, glass, and backing required to be purchased in August.

b) Determine the total costs of direct materials for August purchases.

Answer 1

a) Purchase quantity = Materials requirements for 10,000 units + Ending inventory - Beginning inventory

1. Calculation of materials requirement for 10,000 units:

	For an average frame	For 10,000 units
wood(framing)	4 metres	4*10,000 = 40,000 metres
Glass	1 square metre	1*10,000 = 10,000 square metres
Backing	2 square metres	2*10,000 = 20,000 square metres

2. Calculation of ending inventory (150% of beginning inventory):

	Beginning inventory	Ending inventory needed:
Framing	1,500 metres	1,500*150% = 2,250 metres
Glass	500 Square metres	500*150% = 750 square metres
Backing	500 Square metres	500*150% = 750 square metres

3. Calculation of purchase quantity for august = materials required for 10,000 units + Ending inventory - Beginning inventory

Framing = 40,000 + 2,250 - 1,500 = 40,750 metres

Glass = 10,000 + 750 - 500 = 10,250 square metres

Backing = 20,000 + 750 - 500 = 20,250 square metres

b) Total costs of direct materials purchased in August:

Direct materials	Purchase quantity	Rate per unit of material	Total cost
Framing	40,750 metres	$0.30 per metre	$0.30 * 40,750 = $12,225
Glass	10,250 square metres	$6.00 per square metre	$6.00 * 10,250 = $61,500
Backing	20,250 square metres	$2.25 per square metre	$2.25 * 20,250 = $45,562.5
Total costs of direct materials purchased in august (Framing + Glass + Backing)	$119,287.5