Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 7

A Direct materials purchases budget
MyLife Chronicles Inc. budgeted production of 238,900 diaries in 2016. Paper is required to produce a diary. Assume five square yards of paper are required for each diary. The estimated January 1, 2016, paper inventory is 32,400 square yards. The desired December 31, 2016, paper inventory is 30,800 square yards. If paper costs $0.30 per square yard, determine the direct materials purchases budget for 2016.
B Direct materials purchases budget
Magnolia Candle Inc. budgeted production of 74,200 candles in 2016. Wax is required to produce a candle. Assume eight ounces (one-half of a pound) of wax is required for each candle. The estimated January 1, 2016, wax inventory is 2,500 pounds. The desired December 31, 2016, wax Inventory is 2,100 pounds. If candle wax costs $4.10 per pound, determine the direct materials purchases budget for 2016.