Inventory policy requires that sufficient fabric be in ending monthly inventory to satisfy 15 percent of the following month's production needs and sufficient polyfiberfill be in inventory to satisfy 30 percent of the following month's production needs. Inventory of fabric and polyfiberfill at the beginning of January equals exactly the amount needed to satisfy the inventory policy. Each rabbit produced requires (on average) 0.10 direct labor per hour. The average cost of direct labor is $15.50 per hour. Required: 1. Prepare a direct materials purchase budget of fabric for the first quarter of the coming year, showing purchases in units and in dollars for each month and for the quarter in total. 2. Prepare a direct materials purchases budget of polyfiberfill for the first quarter of the coming year, showing purchases in units and in dollars for each month and for the quarter in total. 3. Prepare a direct labor budget for the first quarter of the following year, showing the hours needed and the direct labor cost for each month and for the quarter in total.
Inventory policy requires that sufficient fabric be in ending monthly inventory to satisfy 15 percent of the following month's production needs and sufficient polyfiberfill be in inventory to satisfy 30 percent of the following month's production needs. Inventory of fabric and polyfiberfill at the beginning of January equals exactly the amount needed to satisfy the inventory policy. Each rabbit produced requires (on average) 0.10 direct labor per hour. The average cost of direct labor is $15.50 per hour. Required: 1. Prepare a direct materials purchase budget of fabric for the first quarter of the coming year, showing purchases in units and in dollars for each month and for the quarter in total. 2. Prepare a direct materials purchases budget of polyfiberfill for the first quarter of the coming year, showing purchases in units and in dollars for each month and for the quarter in total. 3. Prepare a direct labor budget for the first quarter of the following year, showing the hours needed and the direct labor cost for each month and for the quarter in total.
Chapter7: Budgeting
Section: Chapter Questions
Problem 5EB: Cloud Shoes manufactures recovery sandals and is planning on producing 12.000 units in March and...
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