Cashan Corporation makes and sells a product called a Miniwarp.One Miniwarp requires 1.5 kilograms of the raw material Jurislon.Budgeted production of Miniwarps for the next five months is as follows: The company wants to maintain monthly ending inventories of Jurislon equal to 30% of the following month's production needs.On July 31,this requirement was not met since only 10,400 kilograms of Jurislon were on hand.The cost of Jurislon is $4.00 per kilogram.The company wants to prepare a Direct Materials Purchase Budget for the next five months. The desired ending inventory of Jurislon for September is:
A)$29,640
B)$29,520
C)$44,460
D)$44,280

Question

Cashan Corporation makes and sells a product called a Miniwarp.One Miniwarp requires 1.5 kilograms of the raw material Jurislon.Budgeted production of Miniwarps for the next five months is as follows:  The company wants to maintain monthly ending inventories of Jurislon equal to 30% of the following month's production needs.On July 31,this requirement was not met since only 10,400 kilograms of Jurislon were on hand.The cost of Jurislon is $4.00 per kilogram.The company wants to prepare a Direct Materials Purchase Budget for the next five months. The desired ending inventory of Jurislon for September is:
A)$29,640 
B)$29,520 
C)$44,460 
D)$44,280

Quizplus · Accepted Answer

Ending inventory of Jurislon for September = 30% of October's production needs = 30% × 24,600 units × 1.5 kilograms per unit = 11,070 kilograms
Cost of ending inventory of Jurilson = 11,070 kilograms × $4.00 per kilogram = $44,280

Cashan Corporation Makes and Sells a Product Called a Miniwarp