Question

Magnolia, Inc., manufactures bedding sets. The budgeted production is for 23,700 comforters this year. Each comforter requires 7 yards of material. Determine the materials budget for the year if the material costs $5.50 per yard. The estimated January 1 beginning inventory is 3,850 yards with the desired ending balance of 4,100 yards of material.

Answer 1

To determine Magnolia, Inc.'s materials budget, we calculate the total yards required for production, adjust for inventory, and apply the cost per yard to find a total budget of $911,075.

Step-by-step explanation:

To calculate the materials budget for Magnolia, Inc., we will need to consider the total amount of material needed for production, adjustments for starting and ending inventory, and the cost per yard of material.

First, the total yards needed for production can be calculated as follows: 23,700 comforters × 7 yards per comforter = 165,900 yards needed for production.

Then, we adjust for the beginning and desired ending inventory by adding the beginning inventory and subtracting the desired ending inventory: 165,900 yards + 3,850 yards (beginning inventory) – 4,100 yards (desired ending inventory) = 165,650 yards needed to be purchased.

Lastly, we calculate the total material cost by multiplying the total yards to be purchased by the cost per yard: 165,650 yards × $5.50 per yard = $911,075 as the materials budget for the year.

Magnolia, Inc. needs to purchase 165,650 yards of material for production. The total materials budget for the year is $911,075.