Question

Assume that Toy Craft makes ragdolls. Each ragdoll requires 15 square feet of fabric. If the number of dolls to be produced during the quarter is 20,100, the desired ending inventory of fabric is 12,500 square feet, the beginning inventory of fabric is 23,900 square feet, and the cost of the fabric is $12 per square foot, what is the total cost of fabric purchases

Answer 1

Answer:

Total cost - Purchases = $3,481,200

Explanation:

We first need to find out the requirement for fabric to produce 20100 ragdolls and adjust it for the already available inventory of fabric (beginning inventory) and the desired ending inventory.

The production of 20100 ragdolls will require fabric of,

Fabric required = 20100 * 15  => 301500 square feet

The purchase of fabric in square feet will be,

Production = Beginning Inventory + Purchases - Ending Inventory

301500 = 23900 + Purchases - 12500

301500 + 12500 - 23900 = Purchases

Purchases = 290100 square feet

The total cost of fabric purchases will be,

Total cost - Purchases = 290100 * 12

Total cost - Purchases = $3,481,200