Ruff Jeans Company Produces Two Different Types of Jeans: Simple

Essay

Ruff Jeans Company produces two different types of jeans: Simple Life and Fancy Life. The company sales budget estimates that 350,000 of the Simple Life jeans and 200,000 of the Fancy Life jeans will be sold during the current year. The production budget requires 353,500 units of Simple Life and 196,000 units of Fancy Life to be manufactured. The Simple Life jeans require 3 yards of denim material, a zipper, and 25 yards of thread. The Fancy Life jeans require 4.5 yards of denim material, a zipper, and 40 yards of thread. Each yard of denim material costs $3.25, the zippers cost $0.75 each, and the thread is $0.02 per yard. There is enough material to make 2,000 jeans of each type at the beginning of the year. The desired ending inventory is to have enough materials to manufacture 3,500 jeans of each type. Prepare a direct materials purchases budget.