Magnolia, Inc., manufactures bedding sets. The budgeted production is for 17,700 comforters this year. Each comforter requires 7 yards of ma

Magnolia, Inc., manufactures bedding sets. The budgeted production is for 17,700 comforters this year. Each comforter requires 7 yards of material. The estimated January 1 beginning inventory is 4,870 yards with the desired ending balance of 5,400 yards of material. If the material costs $4.70 per yard, determine the materials budget for the year. $

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  1. Answer:

    Explanation:

    Calculation of materials budget for 2012

    Budgeted production units (A)  17,700

    Material Required per unit (Yards) (B)  7

    Total Material required (C) = A*B (Yards)  123,900

    Add: Desired Ending material inventory  5,400

    Less: Beginning Material inventory  (4,870)

    Material to be purchased (Yards)  124,430

    Price Per yard  $4
    .70

    Cost of Material to be purchased $584,821

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  2. Answer:

    $584,821

    Explanation:

    This can be calculated using the following simple equation:

    Budgeted yards of material = Desired ending balance + Materials required – Beginning material

    Material required = 17,700 × 7 = 123,900 yards

    Budgeted yards of material = 5,400 + 123,900 – 4,870 = 124,430

    Materials budget for the year = Budgeted yards of material × Material costs per yard

                                                    = 124,430 × $4.70

    Materials budget for the year = $584,821

    Therefore, Magnolia, Inc. materials budget for the year is $584,821.

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