Question

direct materials purchases budget

quetzaltenango candle inc. budgeted production of 685,000 candles for march. wax is required to produce a candle. assume 8 ounces of wax is required for each candle. the estimated march 1 wax inventory is 15,000 pounds. the desired march 31 wax inventory is 14,500 pounds. if candle wax costs $1.20 per pound, determine the direct materials purchases budget for march. (one pound = 16 ounces.) for those boxes in which you must enter subtracted or negative numbers use a minus sign.

quetzaltenango candle inc.
direct materials purchases budget
for the month ending march 31

line item description | amount
pounds of wax required for production:
candles
desired ending inventory, march 31
total units available
estimated beginning inventory, march 1
total pounds to be purchased
unit price (per lb.)
total direct materials to be purchased in march

Explanation:

Calculate pounds of wax required for production

To find the total pounds of wax needed for production, we first convert the ounces of wax per candle into pounds, and then multiply by the budgeted production volume.

• Budgeted production: \(685,000\) candles
• Wax required per candle: \(8\text{ ounces}\)
• Conversion rate: \(16\text{ ounces} = 1\text{ pound}\)

Pounds of wax per candle:

$$ \frac{8\text{ ounces}}{16\text{ ounces/pound}} = 0.5\text{ pounds/candle} $$

Total pounds of wax required for production:

$$ 685,000\text{ candles} \times 0.5\text{ pounds/candle} = 342,500\text{ pounds} $$

Determine total units available

To find the total units (pounds) available, we add the desired ending inventory to the pounds required for production.

• Pounds of wax required for production: \(342,500\)
• Desired ending inventory (March 31): \(14,500\text{ pounds}\)

Total units available:

$$ 342,500\text{ pounds} + 14,500\text{ pounds} = 357,000\text{ pounds} $$

Calculate total pounds to be purchased

To find the total pounds to be purchased, we subtract the estimated beginning inventory from the total units available.

• Total units available: \(357,000\text{ pounds}\)
• Estimated beginning inventory (March 1): \(15,000\text{ pounds}\)

Total pounds to be purchased:

$$ 357,000\text{ pounds} - 15,000\text{ pounds} = 342,000\text{ pounds} $$

Calculate total direct materials to be purchased

To find the total cost of direct materials to be purchased, we multiply the total pounds to be purchased by the unit price per pound.

• Total pounds to be purchased: \(342,000\text{ pounds}\)
• Unit price (per pound): \(\$1.20\)

Total direct materials to be purchased in March:

$$ 342,000\text{ pounds} \times \$1.20/\text{pound} = \$410,400 $$

Answer:

Quetzaltenango Candle Inc.
Direct Materials Purchases Budget
For the Month Ending March 31

Line Item Description	Amount
Candles	342,500
Desired ending inventory, March 31	14,500
Total units available	357,000
Estimated beginning inventory, March 1	-15,000
Total pounds to be purchased	342,000
Unit price (per lb.)	$1.20
Total direct materials to be purchased in March	$410,400