Casper Corporation makes and sells a product called a Miniwarp. One Miniwarp req

Question

Casper Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 3.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows:

The company wants to maintain monthly ending inventories of Jurislon equal to 10% of the following month's production needs. On July 31, this requirement was not met since only 6,900 kilograms of Jurislon were on hand. The cost of Jurislon is $3.00 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months.

The desired ending inventory of Jurislon for the month of September is:

A) $5,550

B) $21,315

C) $6,090

D) $19,425

Explanation / Answer

Desired ending inventory for September is 10% of October's production needs. October's production needs = 20,300 units 20,300 units*3.5 kg/unit = 71,050 kg 10% of October's production = 7,105 kg Cost = 7105 kg * $3 per kg = $21,315 Answer: B, $21,315

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.