Question

Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

Answer 1

38,880 pounds

Step-by-step explanation:

The computation of direct material purchased is shown below:-

Pounds requirement for production = Production units × Pounds for each box

= 870 × 44 pounds

= 38,280 pounds

Total = Pounds requirement for production + Desired ending inventory

= 38,280 pounds + 4,500 pounds

= 42,780 pounds

Direct material purchased = Total - Beginning inventory

= 42,780 pounds - 3,900 pounds

= 38,880 pounds

Therefore for computing the direct material purchased we simply applied the above formula.