Question 21.3: Landon Awards Co. budgeted production of 47,000 brass plaque...
Landon Awards Co. budgeted production of 47,000 brass plaques in 2014. Brass sheet is required to produce a brass plaque. Assume 96 square inches of brass sheet are required for each brass plaque. The estimated January 1, 2014, brass sheet inventory is 240,000 square inches. The desired December 31, 2014, brass sheet inventory is 200,000 square inches. If brass sheet costs $0.12 per square inch, determine the direct materials purchases budget for 2014.
Square inches required for production: Brass sheet (47,000 × 96 sq. in.). . . . . . . . . . . . . . . . . . . 4,512,000
Plus desired ending inventory, December 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,712,000
Less estimated beginning inventory, January 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,000
Total square inches to be purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,472,000
Unit price (per square inch) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . × $0.12
Total direct materials to be purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \underline{\underline{\$ \ 536,640}}