The manager of Safe Keeping Wallets believes that the company will sell 500 designer credit card safe wallets next month. She expects to have 50 wallets in finished goods inventory at the beginning of the month and would like to have 100 wallets in ending inventory. Each wallet requires 0.25 metres of leather. The manager expects to have 75 metres of leather on hand at the beginning of the month, but she would like to decrease ending inventory to 25 metres. The estimated cost per metre of leather is $30.

Required:

A. How many metres of leather will need to be purchased to meet these requirements? What is the estimated cost?

B. During the month, 480 wallets were sold. Prepare a direct materials purchases budget for this level of sales.

C. Ninety metres of leather were purchased at a total cost of $2,430 (10% per metre discount based on quantity and cash payment). Compare these results to the budgets prepared in A. and B. Be sure to consider ending inventory requirements and the cost of the leather.