Orr Company makes and sells a single product called a Bik. It takes three yards

Question

Orr Company makes and sells a single product called a Bik. It takes three yards of Material A to
make one Bik. Budgeted production of Biks for the next three months is as follows:

Budgeted Biks to be Produced
February 14,000 units
March 15,500 units
April 11,900 units

The company wants to maintain monthly ending inventories of Material A that are equal to 20% of
the following month's production needs. The cost of Material A is $0.80 per yard. The company is
in the process of preparing a direct materials purchases budget.

Calculate the total cost of Material A to be purchased in February. Do not use decimals in your
answer

Explanation / Answer

february: 14,000 x 3 = 42,000

 

march: 15,500 x 3 = 46,500 yards of material A required for march. 

 

46,500 x 20% ending inventory required on hand = 9300

 

february + %20 march

 

42,000 + 9300 = 51,300 x $0.80 = $41,040

 

total cost february 

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

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