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 $.

Question

Business

Lailah Griffith

15 December, 06:44

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 $.

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Ocean · Answer 1

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