FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The display cupboards require two direct materials: oak shelving wood and hickory
plywood backing board.
Oak shelving wood:
Thirty (30) feet of 12x1 oak shelving wood are required for each cupboard produced.
Management desires to have materials on hand at the end of each month equal to 10
percent of the following month's cupboard production needs. The beginning
inventory of oak wood, October 2022, was 10,150 feet of wood. Oak wood is
expected to cost $5.00 per foot.
Hickory plywood backing board:
Hickory plywood backing board is purchased by the sheet and 2 backing boards can
be cut from each sheet. Management desires to have plywood on hand at the end of
each month equal to 15 percent of the following month's production needs. The
beginning inventory of plywood, October 2022, was 100 sheets. Hickory plywood is
expected to cost $45 per sheet. (Note, budgeted production in January is required in
order to complete the direct materials budget for December. Also, use the @ROUND
function to round up to the nearest whole number the number of sheets of plywood
to purchase – “DM quantities to purchase”).
!!QUESTION: CAN SOMEONE PLEASE BREAK DOWN THE CALCULATIONS FOR THESE DIRECT MATERIALS BUDGETS?
Transcribed Image Text:**Direct Materials Budget: Oak Shelving Wood**
| Particulars | Oct 22 | Nov 22 | Dec 22 | Jan 23 |
|------------------------------------|---------|---------|---------|---------|
| No. of display cupboards | 2,333 | 3,427 | 4,663 | 4,922 |
| Oak shelving wood required p.u (feet) | 30 | 30 | 30 | 30 |
| **Total oak shelving wood required (feet)** | 69,990 | 102,810 | 140,070 | 147,660 |
| **Add – Closing stock** | 10,281 | 14,007 | 14,766 | - |
| **Less – Opening stock** | (10,150)| (102,810)| (14,007)| - |
| **Total oak shelving wood purchased (feet)** | 70,121 | 106,536 | 140,829 | - |
| Cost per foot | $5 | $5 | $5 | $5 |
| **Total cost of oak shelving wood purchased** | $350,605 | $532,680 | $704,145 | - |
**Explanation of Data:**
1. **No. of Display Cupboards:** This row shows the number of cupboards expected to be produced each month from October 2022 to January 2023.
2. **Oak Shelving Wood Required Per Unit (feet):** Each cupboard requires 30 feet of oak shelving wood.
3. **Total Oak Shelving Wood Required (feet):** This reflects the total amount of oak wood required each month, calculated as the product of the number of display cupboards and the feet of wood per cupboard.
4. **Add – Closing Stock:** This figure shows the expected closing inventory of oak shelving wood at the end of each month.
5. **Less – Opening Stock:** This indicates the amount of oak shelving wood available at the beginning of each month.
6. **Total Oak Shelving Wood Purchased (feet):** This line calculates the net feet of oak shelving wood that needs to be purchased each month after accounting for opening stock and required amounts.
7. **Cost per Foot:** The price per foot of oak wood remains constant at $5 for the given period.
8. **
Transcribed Image Text:## Direct Materials Budget: History Plywood Packing Board
This document outlines the direct materials budget for plywood packing boards, projected from October 2022 to January 2023, for the production of display cupboards. The budget details the quantities of resources required and provides an analysis of the associated costs.
### Particulars
1. **Number of Display Cupboards**
- **Oct 22:** 2,333 units
- **Nov 22:** 3,427 units
- **Dec 22:** 4,669 units
- **Jan 23:** 4,322 units
2. **Packing Board per Sheet**
- Consistently requires 2 boards per sheet across all months.
3. **Number of Packing Boards Required (Sheets)**
- **Oct 22:** 1,167 sheets
- **Nov 22:** 1,714 sheets
- **Dec 22:** 2,335 sheets
- **Jan 23:** 2,461 sheets
4. **Add: Closing Stock**
- **Oct 22:** 257 sheets
- **Nov 22:** 350 sheets
- **Dec 22:** 369 sheets
5. **Less: Opening Stock**
- **Oct 22:** 100 sheets
- **Nov 22:** 257 sheets
- **Dec 22:** 350 sheets
6. **Number of Packing Boards Purchased (Sheets)**
- **Oct 22:** 1,324 sheets
- **Nov 22:** 1,807 sheets
- **Dec 22:** 2,353 sheets
7. **Cost per Sheet**
- The cost remains consistent at $45 per sheet for all months.
8. **Total Cost of Packing Boards (Sheets)**
- **Oct 22:** $59,553
- **Nov 22:** $81,233
- **Dec 22:** $105,306
This budget plan provides a detailed forecast of the materials needed and the financial implications for each month, allowing for effective financial planning and resource management.
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