Nabors Company reported the following current assets and liabilities for December 31 for two recent years: Dec. 31, Current Year
1 answer:
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Answer:
Budgeted purchase for January = $48,000
Explanation:
Opening stock of raw material = 2,000 pounds
Requirement for January = 4,000 units 2 per unit = 8,000 units
Also provided that inventory upto 25% of next month requirement is to be held, that is for 5,000 units of finished goods 5,000 2 = 10,000 units
25% = 2,500 units, of raw material is required.
Total purchase for January = Closing requirement + Current month requirement - Opening Stock = 2,500 + 8,000 - 2,000 = 8,500 units to be purchased
Total purchase cost = 8,000 units $6 = $48,000
Final Answer
Budgeted purchase for January = $48,000