Projected sales for Sommers, Inc. for the next year and beginning and ending inv
ID: 2551710 • Letter: P
Question
Projected sales for Sommers, Inc. for the next year and beginning and ending inventory data are as follows: Sales in units Beginning inventory in units Targeted ending inventory in units 0,00) 40,000 44,000 The selling price is $40 per unit. Each unit requires four kilos of material which costs $6 per kilo. The beginning inventory of raw materials is 12.000 kilos. The company wants to have 3,000 kilos of material in inventory at the end of the year. Sommers budgeted total purchase cost of direct materials would be a. $1.206,000 b. $1,350,000 c.$1,296,000 O d. None of the answers provided e.$1,242,000Explanation / Answer
Answer e $1,242,000
Explanation :
Units of finished goods to be produced = Sales in units + End. Inventory in units + Beg. Inventory in units
= 50,000 units + 44,000 units - 40,000 units = 54,000 units
Direct Material required for production = 54,000 units * 4kgs = 216,000 Kilos
Direct Material to be purchased = DM required for production + End.Inventory of DM -Beg . Inventory of DM
= 216,000 Kilos + 3,000 kilos - 12,000 Kilos = 207,000 kilos
Total purchased cos of direct materials = 207,000 kilos * $6 = $1,242,000
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