1. (Score 35) A company that makes private and premium dyed blankets is preparing its income budget for 2025. The company expects to sell 15,000 private blankets and 45,000 premium blankets at $35 and $50 respectively. Fabric, private and premium blankets flow in the company under a FIFO system. They estimate that the manufacturing overhead for 2025 will be $100,000, which will be allocated to products using direct manufacturing labor hours. Consider the following information:
2025 2024
Costs & inventories Private Premium prices prices
Fabric (yard/unit) and cost ($/yard) 2,00 2,00 7,00 6,80
Dye (ounces/unit) and cost ($/ounce) 0,00 3,00 0,65 0,50
Direct labor (hours/unit) and cost ($/hour) 0,25 0,35 14,00 14,00
Initial blankets inventories (1/01/25) 900 4.000
Target blankets inventories (31/12/25) 1.200 4.500
Inventories of fabric & dye
Fabric Dye
(yds) (ounces)
Initial inventories (1/01/25): yards & ounces 1.100 1.800
Target inventories (31/12/25): yards & ounces 1.300 2.000
a. Calculate the value of the ending inventory of blankets.
b. Calculate the direct material usage budget in $ (start by calculating the needs of yards and ounces).