The production of product Q has been budgeted for 200,000 units for current mont

Question

The production of product Q has been budgeted for 200,000 units for current month. One unit of product Q requires 2 pounds of raw materials. The projected materials beginning inventory is 2,000 pounds and the projected materials ending inventory Is 10,000 pounds. The cost of materials is $2.50 per pound. The budgeted cost of materials purchases is
A. $1,624,000 B. $1,632,000 C. $1,020,000 D. $1,224,000 The production of product Q has been budgeted for 200,000 units for current month. One unit of product Q requires 2 pounds of raw materials. The projected materials beginning inventory is 2,000 pounds and the projected materials ending inventory Is 10,000 pounds. The cost of materials is $2.50 per pound. The budgeted cost of materials purchases is
A. $1,624,000 B. $1,632,000 C. $1,020,000 D. $1,224,000
A. $1,624,000 B. $1,632,000 C. $1,020,000 D. $1,224,000

Explanation / Answer

Budgeted production = 200,000 units

Raw material required per unit = 2 pounds

Raw material required for current production = 200,000 * 2 pounds = 400,000 pounds

Beginning inventory of raw materials = 2,000 pounds

Expected ending inventory of raw materials = 10,000 pounds

Total raw material to be purchased = Raw material required for current production + ending inventory of raw materials – Beginning inventory of raw materials = 400,000 pounds + 10,000 pounds – 2,000 pounds = 408,000 pounds

Cost per pound of raw material = $2.50 per pound

Budgeted cost of materials purchases = 408,000 pounds * $2.50 = $1,020,000

Hence, Answer is C.$1,020,000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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