Coles Corporation, Inc. makes and sells a single product, Product R. Three yards

Question

Coles 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: 14,000 units 14,500 units 15,500 units 2,600 units 11,900 units Auguat October Novenber The company wants to main an monthly ending in e tones o Material K equal to 20% of the following month's pro ct or needs.O n u .31 is requirement was no me since ni of Material K were on hand. The cost of Material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. 2 00 aras The desired ending inventory of Material K for September is: O 7,560 yards 8,400 yards 8,700 yards 9,300 yards

Explanation / Answer

The desired ending inventory of Material k for Setember

= (Units of Product R in October ) *3 yards of Material K *20 % = 15,500 units * 3 *20 % = 9,300 yards (option d)

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