Final answer:
To calculate the dollar amount of Material A used, we need to determine the production units, calculate the total pounds of Material A required, and then multiply by the cost per pound. The calculation shows that Stephanie Corporation will need 311,000 pounds of Material A, costing $217,700 for the year, which is answer (A).
Step-by-step explanation:
To calculate the dollar amount of Material A used in production during the year, we first need to figure out how many units Stephanie Corporation will produce. We have the budgeted sales, beginning inventory, and desired ending inventory which will help us calculate the production requirement.
To find the total units needed for the year, we add the desired ending inventory to the budgeted sales and then subtract the beginning inventory from that sum:
- 640,000 units (budgeted sales) + 90,000 units (desired ending inventory) = 730,000 units
- 730,000 units - 108,000 units (beginning inventory) = 622,000 units (total units to be produced)
Next, we determine the amount of Material A needed for production based on the per unit requirement:
- 0.50 lb. per unit of Material A is needed
- 622,000 units x 0.50 lb. per unit = 311,000 pounds of Material A needed for production
Lastly, to find the dollar amount used in production for Material A, we multiply the total pounds needed by the price per pound:
- 311,000 pounds x $0.70 per pound = $217,700
Therefore, the dollar amount of Material A used in production during the year is $217,700, which corresponds to option (A).