A company manufactures hammocks under various brand names. The company sells mos
ID: 2454229 • Letter: A
Question
A company manufactures hammocks under various brand names. The company sells most of its hammocks in the second quarter of each year. Their production budget for the second quarter shows the following number of hammocks needs to be produced:
April
6,000 units
May
10,000 units
June
15,000 units
Each unit requires 30 feet of cotton rope cord which costs $.50 per foot. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month.
Refer to the information above. The cost of the rope cord that should be purchased in May is:
*please show workings
April
6,000 units
May
10,000 units
June
15,000 units
Explanation / Answer
Computation of the purchase budget is as follows:
Particulars
April
May
June
Total
Production units
6,000
10,000
15,000
31,000
Material required per unit
30
30
30
30
In feet of rope
180,000
300,000
450,000
930,000
Add:
Desired ending material
60,000
90,000
Total required
240,000
390,000
450,000
1,080,000
Less:
Desired beginning material
60,000
90,000
Net material(Feet) required
240,000
330,000
360,000
1,080,000
Cost per foot
0.5
0.5
0.5
0.5
Cost per feet
0.25
0.25
0.25
0.25
Total cost required
60,000
82,500
90,000
270,000
The total cost to be purchased on the month of May is $82,500.
Particulars
April
May
June
Total
Production units
6,000
10,000
15,000
31,000
Material required per unit
30
30
30
30
In feet of rope
180,000
300,000
450,000
930,000
Add:
Desired ending material
60,000
90,000
Total required
240,000
390,000
450,000
1,080,000
Less:
Desired beginning material
60,000
90,000
Net material(Feet) required
240,000
330,000
360,000
1,080,000
Cost per foot
0.5
0.5
0.5
0.5
Cost per feet
0.25
0.25
0.25
0.25
Total cost required
60,000
82,500
90,000
270,000
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