Soft Glow Candle Co. budgeted production of 78,900 candles in 2010. Wax is requi

Question

Soft Glow Candle Co. budgeted production of 78,900 candles in 2010. Wax is required
to produce a candle. Assume 8 ounces (one half of a pound) of wax is required for each
candle. The estimated January 1, 2010, wax inventory is 2,000 pounds. The desired
December 31, 2010, wax inventory is 2,400 pounds. If candle wax costs $3.20 per pound,
determine the direct materials purchases budget for 2010.

ex - 47000 x 96 4,512,000
plus dec inventory dec 31 200,000
total 4,712,000
less inventory jan 1 240,000
unit price 4,472,000
x .12
total direcct material to be puchased 536,640

Explanation / Answer

Irrespective of the number of lbs required for January and Dec 2010, the budgeted production is 78,900 candles. Each candle requires 0.5lbs of wax. So total amount of wax required for 2010 = 78900 x 0.5lbs = 39450lbs Now, the price per pound of wax = $3.20/lb of wax So, total cost: $3.20 x 39450 =$126240.00 Hope that's what you were looking for.

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