Question

Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 10.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows:August 24,300 unitsSeptember 23,000 unitsOctober 24,400 unitsNovember 25,600 unitsDecember 25,300 unitsThe company wants to maintain monthly ending inventories of Jurislon equal to 25% of the following month's production needs. On July 31, this requirement was not met since only 12,500 kilograms of Jurislon were on hand. The cost of Jurislon is $24 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months.The total cost of Jurislon to be purchased in August is:

Answer 1

Answer: $7,272,600

Step-by-step explanation:

To calculate cost of jurislon in August, we need the following data;

Budgeted production needs:

AUGUST = 24,300 UNITS

SEPTEMBER = 23,000 UNITS

Ending inventory = 25% of the following month(September) production need.

Hence,

August ending inventory = 0.25 × 23,000 = 5,750 Units

Actual budget = 24,300 units

Note: 1 miniwarp = 10.5kg of jurislon

Beginning inventory(july ending inventory) = 12,500kg of jurislon

August ending inventory requires : 5,750 × 10.5 = 60, 375kg of jurislon

Actual budget requires : 24,300 × 10.5 = 255,150kg of jurislon

Actual budget + ending inventory - beginning inventory

255,150kg + 60,375kg - 12,500kg = 303,025kg

Cost of jurislon per kg = $24

Therefore, cost of jurislon to be purchased in August =

303,050kg × $24 = $7,272,600

Answer 2

$7272600 is the august purchase

Step-by-step explanation:

materials purchased = ending inventory + materials used - beginning inventory

( 23000 * 25% * 10.5 ) + ( 24300 * 10.5) -12500

=60375 + 255150 - 12500 = 303025

303025 * $24 = $7272600 is the august purchase