Question

Seranno Publishers Inc. budgeted production of 75,000 diaries in 2016. Paper is required to produce a diary. Assume 77 square yards of paper are required for each diary. The estimated January 1, 2016, paper inventory is 289,000 square yards. The desired December 31, 2016, paper inventory is 260,000 square yards.

If paper costs $0.14 per square yard, determine the direct materials purchases budget for 2016. If required, round your final answer to the nearest dollar.
$

Lidell Publishers Inc. budgeted production of 60,000 diaries in 2016. Each diary requires assembly. Assume that five minutes are required to assemble each diary.

If assembly labor costs $13.75 per hour, determine the direct labor cost budget for 2016. Do not round your intermediate calculations but, if required, round your final answer to the nearest dollar.
$

Answer 1

1) Direct material purchase

	2016
Budgeted production	75000
Square yard of paper	77
Raw material needed for production	5775000
Add: Desired ending inventory	260000
Total	6035000
Less: Beginning inventory	-289000
Raw material purchase	5746000
Cost per square yard	0.14
Cost of material purchase	804440

b) Direct labor budget

	2016
Budgeted production	60000
Hour per unit	5/60 = 0.083
Production hour	5000
Cost per hour	13.75
Direct labor cost	68750