Direct Materials Purchases Budget Pasadena Candle Inc. budgeted production of 750,000 candles for the year. Wax is required to produce a candle. Assume 12 ounces of wax is required for each candle. The estimated January 1 wax inventory is 18,100 pounds. The desired December 31 wax inventory is 13,800 pounds. If candle wax costs $1.30 per pound, determine the direct materials purchases budget for the year. (One pound = 16 ounces.) Round all computed answers to the nearest whole dollar. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Direct Materials Purchases Budget
Pasadena Candle Inc. budgeted production of 750,000 candles for the year. Wax is required to produce a candle. Assume 12 ounces of wax is required for each candle. The estimated January 1 wax inventory is 18,100 pounds. The desired December 31 wax inventory is 13,800 pounds. If candle wax costs $1.30 per pound, determine the direct materials purchases budget for the year. (One pound = 16 ounces.) Round all computed answers to the nearest whole dollar. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
![**Pasadena Candle Inc.**
**Direct Materials Purchases Budget**
**For the Year Ending December 31**
**Pounds of wax required for production:**
- **Candles:** [Input Box]
**Desired ending inventory, December 31:**
- [Input Box]
**Total units available:**
- [Calculated Automatically]
**Estimated beginning inventory, January 1:**
- [Input Box]
**Total pounds to be purchased:**
- [Calculated Automatically]
**Unit price:**
- $ [Input Box]
**Total direct materials to be purchased:**
- $ [Calculated Automatically]
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**Explanation of terms and blanks:**
1. **Candles:** Enter the amount of wax required for candle production.
2. **Desired ending inventory, December 31:** Enter the amount of wax you aim to have in stock at year-end.
3. **Total units available:** This will be automatically calculated by adding the pounds of wax required for production to the desired ending inventory.
4. **Estimated beginning inventory, January 1:** Enter the quantity of wax you have at the start of the year.
5. **Total pounds to be purchased:** This figure will be automatically calculated by subtracting the estimated beginning inventory from the total units available.
6. **Unit price:** Enter the price per pound of wax.
7. **Total direct materials to be purchased:** This will be automatically calculated by multiplying the total pounds to be purchased by the unit price.
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This template helps in planning the budget for direct materials used in candle production, ensuring that necessary inventories are accounted for and that sufficient materials are purchased within the budgeting period.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F51e3d992-6940-44c2-8497-e35f6e845f0f%2Faf53ca7e-9d6d-4e8a-b006-cee620774414%2Fpurcxqc_processed.jpeg&w=3840&q=75)
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