Production estimates for July are as follows: For each unit produced, the direct materials requirements are as follows:
The total direct materials purchases of materials A and B (assuming no beginning or ending material inventory) required for July production is
A) $1,080,000 for A; $648,000 for B
B) $1,080,000 for A; $1,296,000 for B
C) $1,170,000 for A; $702,000 for B
D) $1,125,000 for A; $675,000 for B

Question

Production estimates for July are as follows:  For each unit produced, the direct materials requirements are as follows: 
The total direct materials purchases of materials A and B (assuming no beginning or ending material inventory) required for July production is
A) $1,080,000 for A; $648,000 for B 
B) $1,080,000 for A; $1,296,000 for B 
C) $1,170,000 for A; $702,000 for B 
D) $1,125,000 for A; $675,000 for B

Quizplus · Accepted Answer

To find the total direct materials purchases, we need to multiply the units of each product by its respective direct materials requirements and then add them up for both A and B.
For product A: 
240,000 units x 4 lbs/unit = 960,000 lbs of material A 
240,000 units x 2 lbs/unit = 480,000 lbs of material B 
Total direct materials required for A: 960,000 + 480,000 = 1,440,000 lbs

For product B: 
360,000 units x 1.5 lbs/unit = 540,000 lbs of material A 
360,000 units x 2.4 lbs/unit = 864,000 lbs of material B 
Total direct materials required for B: 540,000 + 864,000 = 1,404,000 lbs

Therefore, the total direct materials purchases required for July production is: 
$1,440,000 (A) + $1,404,000 (B) = $2,844,000
Multiplying the above amount by 0.4 (material A accounts for 40% of the total) gives us:
0.4 x $2,844,000 = $1,137,600 for A
Therefore, the answer is C) $1,170,000 for A; $702,000 for B

Production Estimates for July Are as Follows: for Each