Question

A manufacturing company has budgeted production at 5,000 units for May and 4,400 units in June. Each unit requires 3 pounds of materials at a cost of $10 per pound. On May 1, there are 2,750 pounds of materials on hand. The company desires an ending inventory of 60% of the next month's materials requirements. The total cost of direct materials purchases for May will be $.

Answer 1

Answer:

Total cost= $201,700

Explanation:

Giving the following information:

A manufacturing company has budgeted production at 5,000 units for May and 4,400 units in June. Each unit requires 3 pounds of materials for $10 per pound. On May 1, there are 2,750 pounds of materials on hand. The company desires an ending inventory of 60% of the next month's materials requirements.

Direct material:

Production= 5000*3= 15,000

Ending inventory= (4,400*3)*0.6= 7,920

Beginning inventory= (2,750)

Total= 20,170 pounds

Total cost= 20,170*10= $201,700