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Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402 Exercise 29
Direct Materials Purchases Budget
Refer to Cornerstone Exercise 8.2 for the production budgets for practice balls and match balls. Every practice ball requires 0.7 square yard of polyvinyl chloride panels, one bladder with valve (to fill with air), and 3 ounces of glue. FlashKick's policy is that 20 percent of the following month's production needs for raw materials be ending inventory. Beginning inventory in January for all raw materials met this requirement.
Required:
1. Construct a direct materials purchases budget for each type of raw materials for the practice ball line for January and February of the coming year.
2. What if FlashKick decreased the ending inventory percentage to 15 percent of the next month's production needs? What impact would that have on the direct materials purchases budgets prepared in Requirement 1?
Refer to Cornerstone Exercise 8.2 for the production budgets for practice balls and match balls. Every practice ball requires 0.7 square yard of polyvinyl chloride panels, one bladder with valve (to fill with air), and 3 ounces of glue. FlashKick's policy is that 20 percent of the following month's production needs for raw materials be ending inventory. Beginning inventory in January for all raw materials met this requirement.
Required:
1. Construct a direct materials purchases budget for each type of raw materials for the practice ball line for January and February of the coming year.
2. What if FlashKick decreased the ending inventory percentage to 15 percent of the next month's production needs? What impact would that have on the direct materials purchases budgets prepared in Requirement 1?
Explanation
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Direct Material Purchase budget:
Direct...
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
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