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
LifeTyme Publishers Inc. budgeted production of 191,900 diaries in 2014. Each diary requires assembly. Assume that nine minutes are required to assemble each diary. If assembly labor costs $16.00 per hour, determine the direct labor cost budget for 2014.Answer:
Hours required for assembly: Diaries (191,900 × 9 min.)…………………………………………………… 1,727,100 min. Convert minutes to hours…………………………………………………… ÷ 60 min. Assembly hours……………………………………………………………… 28,785 hrs. Hourly rate…………………………………………………………………….…… × $16.00 Total direct labor cost…………………………………………………………… $460,560
