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Planned Production and Direct Material Purchases Budgeting

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David company expects to sell 25,000 units.

Each unit requires:

5 pounds of direct material at $10 per pound
2 direct labor hours at $12 per direct labor hour

The manufacturing overhead rate is $8 per direct labor hour.

The beginning inventories are as follows:

Direct materials: 5,000 pounds
Finished goods: 3,500 units

The planned ending inventories are as follows:

Direct materials: 6,000 pounds
Finished goods: 2,500 units

Required:

1. What is the planned production?

2. What are the required direct material purchases for the planned production?

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This solution helps with a problem about accounting.

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Required:

1. What is the planned production?

Planned production=

=Sales+Closing stock of finished goods-Opening ...

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