Question

Each unit of finished product requires 3 feet of raw materials. The company maintains raw materials inventory equal to 2,000 feet plus 10% of the next month's expected production needs. The raw material used in Dustman Manufacturing Corporation's product costs $4.50 per foot. What is the value of raw material that Dustman Manufacturing should plan on purchasing for the month of February?

Answer 1

Answer: $99,000

Step-by-step explanation:

Given Data:

Finished products = 1 unit requires 3 feet of material

Raw material inventory = 2000 units + 10% for next month.

Cost of raw materials = $4.50/foot

Therefore:

Since Dustman manufacturing maintains an inventory of 2000 units + 10% for next month.

Total units needed for February would be

= 20,000 units + 10% * 20,000

= 20,000 + 2000

= 22,000 units

Value of raw materials for February

= 22000 units * $4.50

= $99,000