Direct Materials Purchases Budget: Direct Labor Budget Crescent Company produces stuffed toy animals; one of these is "Arabeau the Cow." Each Arabeau takes 0.20 yard of fabric (white with irregular black splotches) and 8 ounces of polyfiberfill. Fabric costs $3.40 per yard and polyfiberfill is $0.05 per ounce. Crescent has budgeted production of Arabeaus for the next four months as follows: Units October 44,000 November 80,000 December 50,000 January 40,000 Inventory policy requires that sufficient fabric be in ending monthly inventory to satisfy 20 percent of the following month's production needs and sufficient polyfiberfill be in inventory to satisfy 40 percent of the following month's production needs. Inventory of fabric and polyfiberfll at the beginning of October equals exactly the amount needed to satisfy the inventory policy. Each Arabeau produced requires (on average) 0.10 direct labor hour. The average cost of direct labor is $15 per hour.
Direct Materials Purchases Budget: Direct Labor Budget Crescent Company produces stuffed toy animals; one of these is "Arabeau the Cow." Each Arabeau takes 0.20 yard of fabric (white with irregular black splotches) and 8 ounces of polyfiberfill. Fabric costs $3.40 per yard and polyfiberfill is $0.05 per ounce. Crescent has budgeted production of Arabeaus for the next four months as follows: Units October 44,000 November 80,000 December 50,000 January 40,000 Inventory policy requires that sufficient fabric be in ending monthly inventory to satisfy 20 percent of the following month's production needs and sufficient polyfiberfill be in inventory to satisfy 40 percent of the following month's production needs. Inventory of fabric and polyfiberfll at the beginning of October equals exactly the amount needed to satisfy the inventory policy. Each Arabeau produced requires (on average) 0.10 direct labor hour. The average cost of direct labor is $15 per hour.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
7.1
Transcribed Image Text:Direct Materials Purchases Budget: Direct Labor Budget
Crescent Company produces stuffed toy animals; one of these is "Arabeau the Cow." Each Arabeau takes 0.20 yard of fabric (white with
irregular black splotches) and 8 ounces of polyfiberfill. Fabric costs $3.40 per yard and polyfiberfill is $0.05 per ounce. Crescent has budgeted
production of Arabeaus for the next four months as follows:
Units
October
44,000
November
80,000
December
50,000
January
40,000
Inventory policy requires that sufficient fabric be in ending monthly inventory to satisfy 20 percent of the following month's production needs
and sufficient polyfiberfill be in inventory to satisfy 40 percent of the following month's production needs. Inventory of fabric and polyfiberfll
at the beginning of October equals exactly the amount needed to satisfy the inventory policy.
Each Arabeau produced requires (on average) 0.10 direct labor hour. The average cost of direct labor is $15 per hour.
Transcribed Image Text:Required:
1. Prepare a direct materials purchases budget of fabric for the last quarter of the year showing purchases in units and in dollars for each
month and for the quarter in total. Round your answers to the nearest cent, if required.
Crescent Company
Direct Materials Purchases Budget for Fabric
For the Fourth Quarter
October November December
Total
Units produced
DM per unit (yd.)
Production needs
Desired ending inventory (yd.)
Total needed
Less: Beginning inventory
DM to be purchased (yd.)
Cost per yard
Total purchase cost
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