Stephanie Corporation sells a single product. Budgeted sales for the year are an

Question

Stephanie Corporation sells a single product. Budgeted sales for the year are anticipated to be 697,000 units, estimated beginning inventory is 106,000 units, and desired ending inventory is 88,000 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 @ $0.60 per pound Material B: 1.00 lb. per unit @ $1.53 per pound Material C: 1.20 lb. per unit @ $1.18 per pound The dollar amount of material A used in production during the year is

A.

$203,700

B.

$1,038,870

C.

$209,100

D.

$961,464

A.

$203,700

B.

$1,038,870

C.

$209,100

D.

$961,464

Explanation / Answer

Production unit = Budgeted sales+Desired ending inventory-Beginning inventory

= 697000+88000-106000

Production unit = 679000 unit

Material A used in production = 679000*0.50*0.60 = 203700

so answer is a) $203700

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