Question

Pasadena Candle Inc. budgeted production of 785,000 candles for January. Wax is required to produce a candle. Assume 10 ounces of wax is required for each candle. The estimated January 1 wax inventory is 16,000 pounds. The desired January 31 wax inventory is 12,500 pounds. If candle wax costs $1.24 per pound, determine the direct materials purchases budget for January. (One pound = 16 ounces.) For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Answer 1

$604,035

Step-by-step explanation:

Assume One Pound = 16 Ounces

Total Wax Required:

= Production of Finished Goods × Pounds of wax required for production

`=785,000*(10)/(16)`

= 490,625 Pounds

Total Units Available = Total Wax Required + Ending Inventory, Jan.31

= 490,625 Pounds + 12,500 pounds

= 503,125 Pounds

Total Pounds to be Purchased:

= Total Units Available - Beginning Inventory, Jan. 1

= 503,125 Pounds - 16,000 pounds

= 487,125 pounds

Total Direct Materials Purchased:

= Total Pounds to be Purchased × Unit price

= 487,125 pounds × $1.24 per pound

= $604,035