Prepare a direct materials purchases budget

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Reference no: EM13157251

Ivan's company produced stuffed toy animals; one of these is randy the reindeer. Each reindeer takes 0.10 yard of fabric and three ounces of poly-fiberfill. Fabric costs $3.50 per yard, and poly-fiberfill is $.05 per ounce. Ivan's has budgeted production of stuffed reindeer for the next four months as follows:

Units
October 40,000
November 80,000
December 50,000
January 60,000

Inventory policy requires that sufficient fabric be in ending monthly inventory to satisfy 15% of the following month's production needs and sufficient poly-fiberfill be in inventory to satisfy 30% of the following month's production needs. Inventory of fabric and poly-fiberfill at the beginning of October equals exactly the amount needed to satisfy the inventory policy.

Each reindeer produced requires (on average) 0.2 direct labor hour. The average cost of direct labor is $10.50 per hour

1. Prepare a direct materials purchases budget of fabric for ht last quarter of the year showing purchases in units and in dollars for each month and for the quarter in total.

2. Prepare a direct materials purchases budget of poly-fiberfill for the last quarter in total.

3. Prepare a direct labor budget for the last quarter of the year showing the hours needed and the direct labor cost for each month and for the quarter in total.

Reference no: EM13157251

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