The Svelte Jeans Company produces two different types of jeans. One is called th

Question

The Svelte Jeans Company produces two different types of jeans. One is called the

The Svelte Jeans Company produces two different types of jeans. One is called the "Simple Life" and the other is called the "Fancy Life". The company sales budget estimates that 350,000 of the Simple Life Jeans and 200,000 of the Fancy Life will be sold during 20xx. The Production Budget requires 353,500 units of Simple Life jeans and 196,000 Fancy Life jeans be manufactured. The Simple Life jeans require 3 yards of denim material, a zipper, and 25 yards of thread. The Fancy Life jeans require 4.5 yards of denim material, a zipper, and 40 yards of thread. Each yard of denim material costs $3.25, the zipper costs $.75 each, and the thread is $.01 per yard. There is enough material to make 2,000 jeans of each type at the beginning of the year. The desired amount of materials left in ending inventory is to have enough to manufacture 3,500 jeans of each type. Prepare a Direct Materials Purchases Budget.

Explanation / Answer

Please find below the purchase budget in the required format:

Total amount to be purchased = units required to be produced + ending inventory - beginning inventory

Total direct materials = $ 6,931,813

Hope this helped ! Let me know in case of any queries.

Svelte Jeans Company Direct Materials Purchases Budget For the Year Ending December 31, 20xx Denim Total (Yards) Zippers (Each) Thread (Yards) Units Required: Simple 1,060,500 353,500 8,837,500 Fancy 882,000 196,000 7,840,000 Desired Ending Inventory: Simple 10,500 3,500 87,500 Fancy 15,750 3,500 140,000 Total 1,968,750 556,500 16,905,000 Less Beginning Inventory: Simple 6,000 2,000 50,000 Fancy 9,000 2,000 80,000 Total Amount to be Purchased 1,953,750 552,500 16,775,000 Unit Price ($) 3.25 0.75 0.01 Total Direct Materials to be Purchased ($) 6,349,688 414,375 167,750 6,931,813

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