Cowles Corporation. Inc. makes and sells a single product. Product R. Three yard

Question

Cowles Corporation. Inc. makes and sells a single product. Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows: The company wants to maintain monthly ending inventories of Material K equal to 30% of the following month's production needs. On July 31. this requirement was not met because only 3.500 yards of Material K were on hand. The cost of Material K is $0.80 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. The desired ending inventory of Material K for September is:

Explanation / Answer

August September October November December Units to be Produced 13000 13500 14500 13600 12900 Material K Required (yards) 39000 40500 43500 40800 38700 Opening Balance of K (yards) 3500 12150 13050 12240 11610 Purchase yards 47650 41400 42690 40170 27090 Closing Balance required to keep 12150 13050 12240 11610 0

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