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Budgeting

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

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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