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    Budgeting

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    Use the following information to solve for a, b, and c.
    Coles Company, 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:

    August�����. 14,000 units
    September���� 14,500 units
    October ����... 15,500 units
    November���� 12,600 units
    December���� 11,900 units

    The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 2,500 yards 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.

    A. The total cost of Material K to be purchased in August is:
    a. $40,970
    b. $48,200
    c. $33,840
    d. $42,300

    B. The desired ending inventory of Material K for the month of September is:
    a. 7,560 yards
    b. 8,400 yards
    c. 8,700 yards
    d. 9,300 yards

    C. The total needs (i.e., production requirements plus desired ending inventory) of Material K for the month of November are:
    a. 37,800 yards
    b. 44,940 yards
    c. 37,380 yards
    d. 45,360 yards

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    https://brainmass.com/business/cash-budgeting/347110

    Solution Preview

    A. Material purchase = Needed for Production + Ending Inventory - Beginning Inventory
    Needed for production = 14,000 units X 3 = ...

    Solution Summary

    The solution explains some multiple choice questions relating to budgeting

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