For 10 Pts: Henry Corp. sells a single product. Budgeted sales are 32,000 units;

Question

For 10 Pts: Henry Corp. sells a single product. Budgeted sales are 32,000 units; estimated beginning inventory is 10,000 units; and desired ending inventory is 9,000 units. Given the quantities of direct materials expected to be used for each unit of finished product below, what is the amount of direct material Y purchased during the year? Material X Material Y Material Z .50 lb. per unit @ $.75 per pound 70 lb. per unit @ $1.20 per pound 1.00 lb. per unit 1.00 per pound A. $37,200 B. $26,880 C. $27,720 D. $26,040 16 99

Explanation / Answer

Production required

= Sales + Closing Inventory – Opening Inventory

= 32,000 + 9,000 – 10,000

= 31,000 units

Quantity of material Y required

= Production x Material Y required per unit

= 31,000 x 0.70

= 21,700 pounds

So, Value of material Y required

= Quantity required x Rate

= 21,700 x $1.20

= $ 26,040

So, as per above calculations, option D is the correct option

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