My Notebook" Inc. budgeted production of 100,000 notebooks in 2017. Paper is required to produce a notebook. Assume 6 square yards of paper are required for each notebook. The estimated January 1, 2017, paper inventory is 150,000 square yards. The desired December 31, 2017, paper inventory is 100,000 square yards. If paper costs $0.50 per square yard, determine the direct materials purchases budget for 2017 in Dollars ($).
$887,950 |
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$275,000 |
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$747,500 |
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$325,000 The budget that needs to be completed first when preparing the master budget is the: Question 3 options:
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Direct materials needed for production = 100,000 * 6 = 600,000
Purchase of direct materials = Direct materials needed for production + Ending direct materials - Beginning direct materials
= 600,000 + 100,000 - 150,000
= 550,000
Direct materils purchase budget = 550,000 square yards * 0.5 per square yard
= 275,000
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Sales budget
(Sales budget drives the operating budget and has to be completed first because it helps define the formation of the other budgets)
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Budgeted production = Sales in units + Ending inventory - Beginning inventory
= 76,000 + 7,000 - 6,500
= 76,500 units
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