XYZ Company makes and sells a single product. Each finished unit requires three

Question

 XYZ Company makes and sells a single product. Each finished unit requires three pounds of direct materials. The budgeted units to be produced over the next four months is as follows:                    Budgeted Units to be Produced             January                18,000 units                              February               19,000 units                              March                  24,000 units                              April                  17,000 units  The company wants to maintain monthly ending inventories of direct materials equal to 25% of the following month's production needs. The cost of the direct materials is $3.20 per pound.  Calculate the total cost of direct materials budgeted to be purchased in March.

Explanation / Answer

Calculate the total cost of direct materials budgeted to be purchased in March. March Unit produced 24000 Material per unit 3 Raw material needed to production 72000 Add: Desired ending inventory (17000*3*25%) 12750 Total 84750 Less: Beginning inventory (72000*25%) -18000 Raw material purchase 66750 Cost per pound 3.20 Direct material purchase cost 213600

Related Questions

Navigate

• Browse (All)
• Browse X
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.