Cahuilla Corporation predicts the following sales in units for the coming four months: Each month's ending Finished Goods Inventory in units should be 40% of the next month's sales March 31 Finished Goods inventory is 96 units. A finished unit requires five pounds of direct material B at a cost of $2.00 per pound. The March 31 Raw Materials Inventory has 200 pounds of direct material B. Each month's ending Raw Materials Inventory should be 30% of the following month's production needs. The budgeted cost of direct material B during May should be:
A) $576.
B) $3,708.
C) $552.
D) $2,016.
E) $2,844.

Question

Cahuilla Corporation predicts the following sales in units for the coming four months:  Each month's ending Finished Goods Inventory in units should be 40% of the next month's sales March 31 Finished Goods inventory is 96 units. A finished unit requires five pounds of direct material B at a cost of $2.00 per pound. The March 31 Raw Materials Inventory has 200 pounds of direct material B. Each month's ending Raw Materials Inventory should be 30% of the following month's production needs. The budgeted cost of direct material B during May should be:
A) $576. 
B) $3,708. 
C) $552. 
D) $2,016. 
E) $2,844.

Quizplus · Accepted Answer

Required production for May:
 11eaadfd_cd05_c585_95d8_1fcee560fc4c_TB6948_00 Required production for June:
 11eaadfd_cd05_ec96_95d8_13eb49886263_TB6948_00 Required purchase of raw Material B:
 11eaadfd_cd06_13a7_95d8_e3780827ad38_TB6948_00 1,422 lbs. × $2.00/lb. = $2,844

Cahuilla Corporation Predicts the Following Sales in Units for the Coming