Question

Cowles Corporation, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows:

August 13,000 units
September 13,500 units
October 14,500 units
November 13,600 units
December 12,900 units
The company wants to maintain monthly ending inventories of Material K equal to 30% of the following month's production needs. On July 31, this requirement was not met because only 3,500 yards of Material K were on hand. The cost of Material K is $0.80 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year.
Required:
1. The total needs (i.e., production requirements plus desired ending inventory) of Material K for November are _______:
O 40,800
O 44,940
O 37,380
O 52,410

Answer 1

The total needs of material K in November = 52,410

Step-by-step explanation:

opening ( 13600 * 3 )= 40,800 *30% 12,240

Purchases 40,170

total Available material 52,410

used for production(13,600*3) 40,800

Closing inventory ( 12,900 *3 ) = 38,700*30% 11,610

The opening inventory for November is October's closing inventory