26. Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

The answer is 38,880

Explanation:

Solution

We recall that:

Tell cooperation plans to sell boxes = 900

The estimated production during May = 870 boxes

The Cost of f clay mix = $0.40 per pound

Each of the boxes requires = 44 pounds of clay mix

The company employees are paid per hour = $12.00

The manufacturing overhead = 110%

The beginning inventory, the teller has = 3900 pounds of clay mix

The ending inventory = 4,500

Now,

The total amount budgeted for the direct materials to be purchased for the month is stated as follows:

The materials budgeted to be purchased is = The budgeted production of materials * the number of raw materials) plus the ending - beginning inventory.

Thus

(870 * 44) + 4500 - 3900

=38,880