Question
Soster makes and sells candles. Each candle uses 1/2 pound of wax. Budgeted production of candles in units for the next five months is as
Soster makes and sells candles. Each candle uses 1/2 pound of wax. Budgeted production of candles in units for the next five months is as follows: March 16,000 units, April 12,000 units, May 14,500 units, June 13,900 units, July 15,500 units. The company wants to mantain monthly ending inventories of wax equal to 30% of the following months budgeted production needs. There were 1,800 pounds of wax on hand on March 31 and 1,000 pounds at March 1. The cost of wax is $.80 per pound. Soster pays 40% of merchandise purchases in the month purchased and 60% inthe following month . Prepare a direct materials purchases budet for April. Determine how much cash will be paid for purchases during April.
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