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Direct Materials and Direct labour The sneakers are made with special leather and specially treated rubber for the sole. The materials and labeur required to
Direct Materials and Direct labour The sneakers are made with special leather and specially treated rubber for the sole. The materials and labeur required to make each pair of sneakers are as follows: Type of sneakers Leather $370 per meter 0.6m 0.4m Cushion $220 per meter 0.15m 0.10m Labour $340 per hour 15 minutes 12 minutes Girls Boys The company requires a closing inventory of 10% of raw material required for the following month's material needed. There was no opening stock of raw material. Thecompany plans to have a closing inventory of leather of 6.2m and 13m of cushioningmaterial as at the 30th September. Materials are purchased from a company based in the Cayman Island. This supplier requiresthat 50% of the purchase total is paid for in cash with the order, and allows one month's credit for the remaining amount. In keeping with government requirements, biodegradable cardboard boxes will be used to package the sneakers. Each box will cost $28.50 per box. The company will buy the packaging materials from a Jamaican company for cash each month. To make girls sneakers, each unit requires 15 minutes of direct labour hours and to make boys Queakers each unit requires 12 minutes of direct labeur hours. The company pays $340per hour for each direct labour hour. Labour costs are paid in the month incurred I. Schedule of cash disbursement to suppliers for direct material (12 marks) - II. Direct labour budget (16 marks) lile Sales and collections The sneakers are designed for girls and boys. Details of selling prices and projected sales in pairs of sneakers for the four-month period are shown below: Type Selling price Girls Boys Months August September 290 320 230 280 July 250 195 $2500 $2900 October 190 160 It is expected that all sales will be on credit to department stores in Jamaica. It is estimated that 30% of customers will pay within one month while the remaining customers will pay the month following sale. Production Production of sneakers will be based on sales demand. The company requires a closing inventory of 20% of the next month's budgeted sales in pairs of sneakers for girls and boys. There is no opening stock of inventory
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