LifeTyme Publishers Inc. budgeted production of 191,900 diaries in 2014. Paper is required to produce a diary.

LifeTyme Publishers Inc. budgeted production of 191,900 diaries in 2014. Paper is required to produce a diary. Assume seven square yards of paper are required for each diary. The estimated January 1, 2014, paper inventory is 29,100 square yards. The desired December 31, 2014, paper inventory is 32,900 square yards. If paper costs $0.80 per square yard, determine the direct materials purchases budget for 2014.

Answer:


Square yards required for production: 
Diaries (191,900 × 7 sq. yd.)………………………………………………… 1,343,300 
Plus desired ending inventory, December 31, 2014…………………………   32,900 
Total………………………………………………………………………………… 1,376,200 
Less estimated beginning inventory, January 1, 2014………………………   29,100 
Total square yards to be purchased…………………………………………… 1,347,100 
Unit price (per sq. yd.)……………………………………………………………   $0.80 
Total direct materials to be purchased……………………………………… $1,077,680