37. Award: 0 out of 2.00 points MC Qu. 117 Cowles Corporation Inc., makes ... Co
ID: 2593802 • Letter: 3
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37.
Award: 0 out of 2.00 points
MC Qu. 117 Cowles Corporation Inc., makes ...
Cowles Corporation Inc., makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows:
August
13,000 units
September
13,500 units
October
14,500 units
November
13,600 units
December
12,900 units
The company wants to maintain monthly ending inventories of Material K equal to 30% of the following month's production needs. On July 31, this requirement was not met because only 3,500 yards of Material K were on hand. The cost of Material K is $0.80 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year.
The total needs (i.e., production requirements plus desired ending inventory) of Material K for November are:
A)52,410 yards
B)37,380 yards
C)40,800 yards
D)44,940 yards
August
13,000 units
September
13,500 units
October
14,500 units
November
13,600 units
December
12,900 units
Explanation / Answer
Yards of K needed for November production (3 x 13,600) = 40,800
Add: Yards of K needed for ending inventory (30% x 12,900) x 3 = 11,610
Total requirement = 52,410
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