Shanahan Corporation produces three types of media: CDs, DVDs, and double-layer DVDs. Shanahan purchases cases for the

Question:

Shanahan Corporation produces three types of media: CDs, DVDs, and double-layer DVDs. Shanahan purchases cases for the media from a firm in Mexico and purchases the labels from another supplier in Brazil. The following materials are required for production:

Double-Layer DVD DVD CD Cases Labels S1.75 2.50 $2.30 $3.05 2.00

Beginning inventory for Shanahan is 5,000, 7,000, and 3,500 cases for CDs, DVDs, and double-layer DVDs, respectively. Management wants to have 5,000 CD and double-layer DVD cases and 2,500 DVD cases in ending inventory. Projected sales for the first half of 2010 are 40,000 CD cases, 21,000 DVD cases, and 14,000 double-layer DVD cases.
Shanahan's policy is to pay 80% of its accounts with suppliers by the end of each half year. The balance in accounts payable on January 1, 2010, is $55,000.
1. Prepare a budget for direct materials purchases for the first half of 2010.
2. Prepare a budget for payments to direct materials suppliers for the first half of2010.

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