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29 August, 21:08

A manufacturing company has budgeted production at 5,000 units for May and 4,400 units in June. Each unit requires 3 pounds of materials at a cost of $10 per pound. On May 1, there are 2,750 pounds of materials on hand. The company desires an ending inventory of 60% of the next month's materials requirements. The total cost of direct materials purchases for May will be $.

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  1. 30 August, 00:53
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    Total cost = $201,700

    Explanation:

    Giving the following information:

    A manufacturing company has budgeted production at 5,000 units for May and 4,400 units in June. Each unit requires 3 pounds of materials for $10 per pound. On May 1, there are 2,750 pounds of materials on hand. The company desires an ending inventory of 60% of the next month's materials requirements.

    Direct material:

    Production = 5000*3 = 15,000

    Ending inventory = (4,400*3) * 0.6 = 7,920

    Beginning inventory = (2,750)

    Total = 20,170 pounds

    Total cost = 20,170*10 = $201,700
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