QUESTION 1 Two yards of a fabric are required for each blouse produced by Northe

Question

QUESTION 1 Two yards of a fabric are required for each blouse produced by Northern Shirt Corporation. The cost of the fabric is $3 per yard. Budgeted production of blouses is given below for the fourth quarter and the first month of the following quarter. October November December January Required production blouses0018,000 16,000 12,000 To prevent against stock outs of the fabric, the company maintains an ending inventory each month equal to 11% of the next month's production needs What is the cost for the fabric to be purchased in November? Round your final answer as an integer, ignore the dollar sign.

Explanation / Answer

Calculate cost of fabric purchased in november :

Cost of fabric purchased in november = 35560*3 = 106680

November Production 18000 Fabric per unit 2 Production needs 36000 Add: Desired ending (16000*2*11%) 3520 Total 39520 Less: Beginning inventory (36000*11%) -3960 Purchase quantity 35560

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