Question

Direct Materials Purchases Budget

Pasadena Candle Inc. budgeted production of 770,000 candles for the year. Wax is required to produce a candle. Assume 12 ounces of wax is required for each candle. The estimated January 1 wax inventory is 16,300 pounds. The desired December 31 wax inventory is 12,500 pounds. If candle wax costs $1.70 per pound, determine the direct materials purchases budget for the year. (One pound = 16 ounces.) Round all computed answers to the nearest whole dollar. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Pasadena Candle Inc.
Direct Materials Purchases Budget
For the Year Ending December 31
Pounds of wax required for production:
Candles
Desired ending inventory, December 31
Total units available
Estimated beginning inventory, January 1
Total pounds to be purchased
Unit price $
Total direct materials to be purchased $

Answer 1

Calculate the Direct Materials Purchases Budget for Pasadena Candle Inc., combine the total wax required for production, adjust for beginning and ending inventories, and multiply by the price per pound of wax.

Step-by-step explanation:

The student's question pertains to creating a Direct Materials Purchases Budget for Pasadena Candle Inc. To solve this, we need to calculate the total pounds of wax needed for production, accounting for both the beginning inventory and the desired ending inventory for the year.


Then, we'll determine the total direct materials cost by factoring in the price per pound of wax.

1. Firstly, calculate the total amount of wax needed for the year's production (770,000 candles × 12 ounces per candle) and convert it into pounds by dividing by 16 ounces per pound.
   
   
2. Then, add the desired ending inventory and subtract the beginning inventory to find out how many pounds of wax must be purchased for the year.
   
   
3. Lastly, multiply the total pounds to be purchased by the unit price of wax ($1.70 per pound) to get the total direct materials cost for the year, rounding to the nearest whole dollar.

To illustrate, if products had longer lifecycles or more diverse pricing, the computed total costs would reflect these complexities, similar to the provided examples such as $17,147.51 or $27,654.92.