Answer:
Cost of purchase for first quarter = $766,500
Explanation:
Total production of current quarter = 57,000 pairs
Raw material required for above = 57,000 X 2 kg per pair = 114,000 kg
Less: Opening inventory of raw material 28,500 kg = 114,000 - 28,500 = 85,500 kg required for quarter 1
Also provided that closing inventory shall be 25% of total raw material required for next quarter.
Raw material required in second quarter = 48,000 pairs X 2 kg each = 96,000 kg
25% of above = 96,000 X 25% = 24,000 kg
Total raw material to be purchased in current quarter that is first quarter = 85,500 kg + 24,000 kg = 109,500 kg
Rate not provided assumed to be same as of opening inventory that is $7 per kg, therefore cost of purchase for first quarter = 109,500 kg X $7 = $766,500
