#39 Smoke, Inc. makes and sells buckets. Each bucket uses 1/2 pound of plastic.
ID: 2485793 • Letter: #
Question
#39
Smoke, Inc. makes and sells buckets. Each bucket uses 1/2 pound of plastic. Budgeted production of buckets in units for the next three months is as follows: The company wants to maintain monthly ending inventories of plastic equal to 25% of the following month's budgeted production needs. The cost of plastic is $2.20 per pound. Prepare a direct materials purchases budget for the month of May. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round pounds of plastic needed for each bucket to 1 decimal palce and cost per pound to two decimal palces.)Explanation / Answer
Production need for may 22000 Requirement per bucket 1/2 Plactice used in bucket 11000 Add: Ending Inventory desired [24000*1/2] =12000* .25 3000 less:Beginning Inventory [22000*1/2] = 11000*.25 (2750) Plastic purchased 11250 cost per plastic 2.20 Purchase cost of plastic 24750
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