Question

Direct Materials Purchases Budget

Pasadena Candle Inc. budgeted production of 700,000 candles for the January. Wax is required to produce a candle. Assume 10 ounces of wax is required for each candle. The estimated January 1 wax inventory is 18,400 pounds. The desired January 31 wax inventory is 14,500 pounds. If candle wax costs $2.10 per pound, determine the direct materials purchases budget for January. (One pound = 16 ounces.) Round all computed answers to the nearest whole number. 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 Month Ending January 31
Pounds of wax required for production:
Candles
Desired ending inventory, January 31
Total units available
Estimated beginning inventory, January 1
Total pounds to be purchased
Unit price	$
Total direct materials to be purchased in January	$

Answer 1

Solution

Pasadena Candle Inc.
Direct Materials Purchases Budget
For the Month Ending January 31
Pounds of wax required for production:
Candles	437500
Desired ending inventory, January 31	14500
Total units available	452000
Estimated beginning inventory, January 1	-18400
Total pounds to be purchased	433600
Unit price	$          2.10
Total direct materials to be purchased in January	$910,560.00

Total ounces required for production= 700000 units x 10= 7,000,000 ounce

Pounds required for ptoduction= 7,000,000/16=437,500 pounds