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15 January, 04:31

Masterson Company's budgeted production calls for 56,000 units in April and 52,000 units in May of a key raw material that costs $1.85 per unit. Each month's ending raw materials inventory should equal 30% of the following month's budgeted materials. The April 1 inventory for this material is 16,800 units. What is the budgeted materials purchases for April

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  1. 15 January, 08:03
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    Total cost = $101,380

    Explanation:

    Giving the following information:

    Production for April = 56,000

    Production for May = 52,000

    The raw material costs $1.85 per unit.

    Each month's ending raw materials inventory should equal 30% of the following month's budgeted materials. The April 1 inventory for this material is 16,800 units.

    We need to determine the budgeted material purchases for April:

    Purchases = production for April + ending inventory - beginning inventory

    purchases = 56,000 + (52,000*0.3) - 16,800 = 54,800 units

    Total cost = 54,800*1.85 = $101,380
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