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ELEN [110]
2 years ago
8

A sporting goods manufacturer budgets production of 48,000 pairs of ski boots in the first quarter and 39,000 pairs in the secon

d quarter of the upcoming year. Each pair of boots require 2 kg of a key raw material. The company aims to end each quarter with ending raw materials inventory equal to 20% of the following quarter's material needs. Beginning inventory for this material is 19,200 kg and the cost per kg is $9. What is the budgeted materials purchases cost for the first quarter
Business
1 answer:
professor190 [17]2 years ago
5 0

Answer:

$831,600

Explanation:

The budget must account for all of the production of the first quarter and 20% of the production of the second quarter, the number of boots considered in the budget is:

b= 48,000 +0.20*39,000\\b=55,800\ boots

Assuming that each boot uses exactly 2kg of raw material and that the company has 19,200 kg on hand, the amount of raw material still required is:

m = 2*55,800-19,200\\m=92,400\ kg

If the cost per kg is $9, then the budgeted materials purchases cost for the first quarter is:

C=92,400*\$9\\C=\$831,600

The budgeted materials purchases cost is $831,600.

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