question archive Soster makes and sells candles
Soster makes and sells candles
Subject:AccountingPrice: Bought3
Soster makes and sells candles. Each candle uses 0.6 kilograms of wax. Budgeted production of candles in units for the next five months is as follows:
|
March |
April |
May |
June |
July |
|
|
Budgeted Production |
20,000 |
17,000 |
18,000 |
15,000 |
16,000 |
The company wants to maintain monthly ending inventories of wax equal to 25% of the following month's budgeted production needs. There were 1,300 kilograms of wax on hand on March 31 and 900 kilograms at March 1. The cost of wax is $0.75 per kilogram. Soster pays 45% of merchandise purchases in the month purchased and 55% in the following month.
Instructions:
a. Prepare a direct materials purchases budget for the April.
b. Determine how much cash will be paid for purchases during April?
