Problem 1 - Pretty Pictures By Manufacturers Of Picture Fram

Problem 1 - Picture Pretty manufactures picture frames. Sales for August are expected to be 10,000 units of various sizes

Picture Pretty manufactures picture frames, with an expected sales volume of 10,000 units for August. Each frame requires four feet of framing material, one square foot of glass, and two square feet of backing. The beginning inventory includes 1,500 feet of framing, 500 square feet of glass, and 500 square feet of backing. Prices are $0.30 per foot for framing, $6.00 per square foot for glass, and $2.25 per square foot for backing. The ending inventory should be 150% of the beginning inventory. Purchases are paid for in the month acquired.

Question 1: Determine the quantity of framing, glass, and backing that is to be purchased during August.

Question 2: Determine the total costs of direct materials for August purchases.

Paper For Above instruction

In August, Picture Pretty expects to sell 10,000 picture units, each requiring specific amounts of materials: four feet of framing, one square foot of glass, and two square feet of backing. To determine the quantities of materials to purchase, it is essential to calculate the total material needed based on this sales volume, existing inventory, and the desired ending inventory levels.

Calculating Material Requirements

First, establish the total material needed for the projected sales:

  • Framing: 10,000 units × 4 feet = 40,000 feet
  • Glass: 10,000 units × 1 sq ft = 10,000 sq ft
  • Backing: 10,000 units × 2 sq ft = 20,000 sq ft

Next, determine the ending inventory quantities. The company aims to keep ending inventory at 150% of beginning inventory:

  • Ending framing inventory: 1,500 feet × 150% = 2,250 feet
  • Ending glass inventory: 500 sq ft × 150% = 750 sq ft
  • Ending backing inventory: 500 sq ft × 150% = 750 sq ft

Calculate the total materials needed, subtracting beginning inventory, and adding the desired ending inventory to ensure sufficient materials are purchased:

Framing

Required framing for sales: 40,000 feet

Less beginning inventory: 1,500 feet

Plus ending inventory: 2,250 feet

Total framing to be purchased:

40,000 - 1,500 + 2,250 = 40,750 feet

Glass

Required glass for sales: 10,000 sq ft

Less beginning inventory: 500 sq ft

Plus ending inventory: 750 sq ft

Total glass to be purchased:

10,000 - 500 + 750 = 10,250 sq ft

Backing

Required backing for sales: 20,000 sq ft

Less beginning inventory: 500 sq ft

Plus ending inventory: 750 sq ft

Total backing to be purchased:

20,000 - 500 + 750 = 20,250 sq ft

Calculating Total Costs of Direct Materials

Procurement costs are calculated by multiplying the purchase quantities by their respective unit costs:

  • Framing: 40,750 feet × $0.30 = $12,225
  • Glass: 10,250 sq ft × $6.00 = $61,500
  • Backing: 20,250 sq ft × $2.25 = $45,562.50

Thus, the total direct material costs for August purchases are:

$12,225 + $61,500 + $45,562.50 = $119,287.50

Conclusion

In conclusion, Picture Pretty should purchase approximately 40,750 feet of framing, 10,250 square feet of glass, and 20,250 square feet of backing in August. The total cost of these purchases will amount to approximately $119,287.50, ensuring sufficient inventory levels to meet sales and maintain desired ending inventory levels. These calculations enable effective procurement planning, optimize inventory levels, and control costs, contributing to the company's operational and financial efficiency.

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