Seranno Inc. budgeted production of 33,000 personal journals in 20Y6. Paper is required to produce a journal. Assume 93 square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 215,000 square yards. The desired December 31, 20Y6, paper inventory is 138,000 square yards. If paper costs $0.09 per square yard, determine the direct materials purchases budget for 20Y6. If required, round your final answer to the nearest dollar.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Direct Materials Purchases Budget
Seranno Inc. budgeted production of 33,000 personal journals in 20Y6. Paper is required to produce a journal. Assume 93 square yards of paper are required for each journal. The estimated January 1, 20Y6, paper inventory is 215,000 square yards. The desired December 31, 20Y6, paper inventory is 138,000 square yards.
If paper costs $0.09 per square yard, determine the direct materials purchases budget for 20Y6. If required, round your final answer to the nearest dollar.
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