The Boston Box Company makes cardboard boxes. For March and April, Boston expects to produce 12,000 and 15,800 boxes, respectively.
The main material input for Bosworth's boxes is cardboard. To make one box, Bosworth budgets to use 12 linear feet of 2-foot-wide cardboard at a cost of $0.75 per linear foot. Further, while Bosworth expects to begin March with 50,000 linear feet of 2-footwide cardboard, its direct materials inventory policy is to have 40 percent of the next month's total material needs in ending inventory.
Required:
a. What is Boston's cardboard purchases budget for March?
b. What is Boston's cardboard usage budget for March? Assume that Boston's beginning inventory of cardboard is also valued at $0.75 per linear foot and that Boston uses the First-In-First-Out (FIFO) inventory method.
c. (Appendix) Suppose Boston values its beginning inventory of cardboard at $0.70 per linear foot, but still expects to pay $0.75 per linear foot for March purchases. Assuming Boston uses a FIFO cost flow assumption, what is Boston's cardboard usage budget for March?