Question

Direct Materials Purchases Budget 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

Answer 1

$604,035

Step-by-step explanation:

The computation of the direct materials purchases budget is shown below:-

Total Wax Required 490,625 Pounds

(785,000 × 10 ÷ 16)

Add: Ending Inventory 125,00 Pounds

Total Units Available 503125 Pounds

Less: Beginning Inventory 16,000 Pounds

Total Pounds to be Purchased 487,125 Pounds

Unit Price $1.24 per Pounds

Total Direct Materials Purchased $604,035

(487,125 × $1.24)