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Alenkasestr [34]
3 years ago
5

Production estimates for August are as follows:

Business
1 answer:
Minchanka [31]3 years ago
7 0

Answer:

Instructions are below.

Explanation:

Giving the following information:

Production:

Estimated inventory (units), August 1 12,000

Desired inventory (units), August 31 2,000

Expected sales volume (units), August 75,000

For each unit produced, the direct materials requirements are as follows:

Direct material A ($5 per pound) 3Ibs

Direct material B ($15 per pound) 1/2 Ib

First, we need to determine the number of pounds required.

Production= sales + desired ending inventory - beginning inventory

Production= 75,000 + 2,000 - 12,000= 65,000 units

<u>Purchases in pounds:</u>

Direct material A= 65,000*3= 195,000

Direct material B= 65,000*0.5= 32,500

Total pounds= 227,500

<u>Now, the cost of direct material:</u>

<u>Direct material cost:</u>

Direct material A= 195,000*5= $975,000

Direct material B= 32,500*15= $487,500

Total= $1,462,500

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