Question
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?
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