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

Question

Calculator Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 634,000 units, estimated beginning inventory is 104,000 units, and desired ending inventory is 83,000 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 @ $0.51 per pound Material B 1.00 lb. per unit $1.51 per pound Material ? 1.20 lb, per unit @ $1.39 per pound The dollar amount of Material C used in production during the year is a. $920,236 Ob. $1,124,732 c. $1,226,981 Od. $1,022,484

Explanation / Answer

First of all we have to calculate no of Units to be produced during the year,

Production during the year = Budget Sales + Desired closing stocks - opening stocks

= 634000 + 83000 - 104000 units = 613000 units to be produced by Mandy Company

1.2 lb per unit of Material 'C' will be used for 1 unit of finished goods

Consumption of material 'c' = no of unit produced * Material used per unit

= 613000* 1.2 lb = 735600 Units
Cost of material 'C' = consumption of 'C' * rate per unit of 'C'

= 735600* $1.39 = $ 10,22,484

Option (d) will be answer

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