Question

Yummy Jams Company produces a line of jams. Yummy's estimated production of jars of jam for the fourth quarter of the year is as follows: October 75,000 November 98,000 December 63,000 Each jar requires half a pound of berries. Yummy prefers to buy the freshest berries, so its policy is to have just 3 percent of the following month's production needs in ending inventory. On October 1, the company had 1,125 pounds of berries in inventory. Yummy's pays $0.60 per pound of berries. It buys all berries on account and typically pays 40 percent of a month's purchases in that month, and the remaining 60 percent the following month. How many pounds of berries will be purchased during the month of November?

A) 49,945.
B) 39,925.
C) 41,950.
D) 48,475.
E) 23,375.

Answer 1

D) 48,475

Step-by-step explanation:

Purchases = Consumption + Closing Stock - Opening Stock

Opening Stock in November Month = 98000/2 * 3%

= 1470

Closing Stock in November Month = 63000/2*3%

= 945

Consumption in november Month = 98000/2

= 49000

Purchase In November 2012 = 49000 + 945 - 1470

= 48475

Therefore, 48475 pounds of berries will be purchased during the month of November