Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2

Question

Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2.5 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 20% of the following month's production needs. On July 31 this requirement was not met since only 10,800 kilograms of Jurislon were on hand. The cost of Jurislon is S18.00 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 August September October November December 22,600 units 21,300 units 22,700 units 23,900 units 23,600 units Select one O a. S81,720 O b. S204,300 O c. $191,700 O d. S76,680

Explanation / Answer

Calculate desired ending inventory for september :

Desired ending inventory for september = (22700*2.5*20%) = 11350*18 = 204300

so answer is b) $204,300

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