Prepare a direct materials purchasing plan for January, February, and March, bas
ID: 2475303 • Letter: P
Question
Prepare a direct materials purchasing plan for January, February, and March, based on the following facts:
Lana Gonzales owns a business that assembles ceiling fan units. Each fan requires one motor system and four blades. Motors cost $40 each, and blades are $3.50 each. Lana is able to reliably obtain motors as needed, and does not maintain them in inventory. However, blades are stocked in inventory sufficient to produce 30% of the following month's expected production. Planned production is as follows:
January 10,000
February 12,000
March 15,000
April 11,000
In accordance with the stocking plan, January's beginning inventory included 12,000 blades.
Explanation / Answer
Sl No Particulars operation January February March April 1 Expected Production 10000 12000 15000 11000 2 Blade Required Sl no 1 X 4 40000 48000 60000 44000 3 Motor System required Sl no 1 X 1 10000 12000 15000 11000 4 Opening stock of Blade 12000 14400 18000 13200 5 Closing Inventory of blade 30% of next month's requirement 14400 18000 13200 6 Purchase of Blade Sl no 5 + Sl no 2 - Sl no 4 42400 51600 55200 7 Purchase of Motor System Sl no 3 10000 12000 15000 8 Cost per Blade As given 3.5 3.5 3.5 9 Cost per Motor As given 40 40 40 10 Purchase value of Blade($) Sl no 6 X Sl no 8 148400 180600 193200 11 Purchase value of Motor($) Sl no 7 X Sl no 9 35000 42000 52500 12 Total Purchase value of Material($) Sl no 10 + Sl no 11 183400 222600 245700