Northwest manufactures a product requiring 0.5 ounces of platinum per unit The cost of platinum Is approximately $360 per ounce; the company maintains an ending platinum inventory equal to 10% of the following month's production usage. The following data were taken from the most recent quarterly production budget Planned production in units July 1,000 August 1,100 September 980 The cost of platinum to be purchased to support August production is:

Question

Business

Pamela Charles

27 May, 05:52

Northwest manufactures a product requiring 0.5 ounces of platinum per unit The cost of platinum Is approximately $360 per ounce; the company maintains an ending platinum inventory equal to 10% of the following month's production usage. The following data were taken from the most recent quarterly production budget Planned production in units July 1,000 August 1,100 September 980 The cost of platinum to be purchased to support August production is:

+4

Answers (1)

Know the Answer?

Iris Buckley · Answer 1

The cost of platinum to be purchased to support August production is $195,840

Explanation:

The computation is shown below:

= August production units - July production units based on august * 10% + September production units * 10%

= 1,100 - 1,100 * 10% + 980 * 10%

= 1,100 - 110 + 98

= 1,088 units

Now the required platinum would be = $1,088 * 0.5 = 544 ounces

And, the cost of per ounces is $360

So, the total cost of platinum would be

= 544 ounces * $360

= $195,840