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Soft and Silky, Inc. manufactures bedding sets. The budgeted production is for 53,000 comforters during the upcoming year. Each comforter requires 6 yards of material. The estimated January 1, 20Y7, beginning inventory is 31,000 yards. The desired ending balance is 30,000 yards of material. If the material costs $1.50 per yard, determine the materials budget for the year.

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Answer:

The materials budget for the year = $475,500

Explanation:

let us first lay out the particulars

beginning inventory = 31,000 yards

ending balance = 30,000 yards

amount sold from beginning inventory  =  31,000 - 30,000 = 1,000 yards

budgeted production = 53,000 comforters

requirement for each comforter = 6 yards

total budgeted yards to be required = (requirement for each comforter) × (number of comforters)

= 6 × 53,000 = 318,000 yards

Note that required number of yards to be required during the year = 318,000 yards, but we have 1,000 yards available from the beginning inventory, as shown above, therefore, the number of yards to be produced is calculated as follows:

number of yards to be produced = (required number of yards) - ( number of yards from beginning inventory)

= 318,000 - 1000 = 317,000 yards.

Next, we are told that material cost per yard = $1.50

1 yard = $1.50

∴ 317,000 yards = 1.50 × 317,000 = $475,500

Therefore the materials budget for the year = $475,500