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Use the following information to answer questions 4 - 6 The Sierra Furniture Co. manufactures and sells three desks, Standard, Executive, & Chairman. Their accounting

Use the following information to answer questions 4 - 6

The Sierra Furniture Co. manufactures and sells three desks, Standard, Executive, & Chairman. Their accounting office has gathered the following data in order to prepare budgets for the next year:

Next year projected sales

Product

Units

Price

Standard

15,000

$400

Executive

10,000

$500

Chairman

8,000

$600

The following direct materials are expected to be used in the two products:

Material Used per Desk

Direct Material

Standard

Executive

Chairman

Oak (pounds)

4

6

7

Pine (pounds)

8

5

10

Projected DM data

Direct Materials

Purchase Price/pound

Inventories (January 1)

Inventories (Dec 31)

Oak (pounds)

$25

4,000 lb

4,600 lb

Pine (pounds)

$15

7,000 lb

5,500 lb

Target Inventories

Product

January 1

December 31

Standard

2,000

2,500

Executive

4,000

3,800

Chairman

1,500

1,800

Projected direct labor requirements and rates

Product

Hours Per Unit

Rate Per Hour

Standard

4

$10

Executive

5

$15

Chairman

6

$20

Budgeted FOH rate is $6/direct labor hour.

Determine the DM purchases budget for Pine?

Question 4 options:

a)

$3,777,000

b)

$3,817,500

c)

$179,500

d)

$254,500

e)

$4,487,500

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