Orr Company makes and sells a single product called a Bik. It takes 3 yards of M

Question

Orr Company makes and sells a single product called a Bik.

It takes 3 yards of Material A to make one Bik.

Budgeted production of Biks for the next three months is as follows:

Budgeted Biks to be Produced:

February 14,000 units

March 15,500 units

April 11,000 units

The company wants to maintain monthly ending inventories of Material A that are equal to 20% of

the following month's production needs.

The cost of Material A is $0.80 per yard.

The company is in the process of preparing a direct materials purchases budget.

Calculate the total cost of Material A to be purchased in February. Do not use decimals in your

answer.

Explanation / Answer

the total cost of A for the month of February is - 14000*0.8*3= $33600

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