Mandy Corporation sells a single product. Budgeted sales for the year are antici

Question

Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 662,000 units, estimated beginning inventory is 110,000 units, and desired ending inventory is 81,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.

Material A 0.50 lb. per unit @ $0.61 per pound
Material B 1.00 lb. per unit @ $1.63 per pound
Material C 1.20 lb. per unit @ $1.10 per pound

The dollar amount of Material C used in production during the year is

a.$1,002,672

b.$919,116

c.$835,560

d.$752,004

Explanation / Answer

c. $835,560

Units Expected to be Produced = Sales + Closing Inventory - Opening Inventory = 662,000 + 81,000 - 110,000 = 633,000

Dollar Amount of Material C = 633,000 * 1.20 * $1.10 = $835,560

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