Question

Prepare a direct materials purchasing plan for January, February, and March, based on the following facts. Lana Gonzales owns a business that assembles ceiling fan units. Each fan requires one motor system and four blades. Motors cost $45 each, and blades are $4.00 each. Lana is able to reliably obtain motors as needed, and does not maintain them in inventory. However, blades are stocked in inventory sufficient to produce 40% of the following month's expected production. Planned production is as follows: January 11,000 February 13,000 March 16,000 April 12,000 In accordance with the stocking plan, January's beginning inventory included 13,000 blades.

Answer 1

January cost $702,200

February cost $812,200

March cost $950,400

Total Purchase cost

Particulars January February March

Purchase cost of blades $ 207,200.00 $ 227,200.00 $ 230,400.00

Purchase cost of motor $ 495,000.00 $ 585,000.00 $ 720,000.00

$ 702,200.00 $ 812,200.00 $ 950,400.00

Explanation:

R.M budget - blades

Particulars January February March April

Planned production 11000 13000 16000 12000

Blades req. per unit 4 4 4 4

Material req. for prod. 44000 52000 64000 48000

Add: Desired ending inventory 20800 25600 19200 0

Less: Beginning inventory 13000 20800 25600

Net units of blades req. 51800 56800 57600

Cost per blade $ 4.00 $ 4.00 $ 4.00

Purchase cost of blades $ 207,200.00 $ 227,200.00 $ 230,400.00

R.M budget - motor

Particulars January February March April

Planned production 11000 13000 16000 12000

Motor req. per unit 1 1 1 1

Material req. for prod. 11000 13000 16000 12000

Cost per motor $ 45.00 $ 45.00 $ 45.00

Purchase cost of motor $ 495,000.00 $ 585,000.00 $ 720,000.00