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Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows: August 24,400 units September 23,100 units October 24,500 units November 25,700 units December 25,400 units The company wants to maintain monthly ending inventories of Jurislon equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 12,600 kilograms of Jurislon were on hand. The cost of Jurislon is $25 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months. The total cost of Jurislon to be purchased in August is:

Respuesta :

Answer:

$1,498,750

Explanation:

The computation of total cost to be purchased is shown below:-

Materials purchased = Ending inventory + materials used - Beginning inventory

= (23,100 × 20% × 2.5) + (24,400 × 2.5) - 12,600

= 11,550 + 61,000 - 12,600

= 72,550 - 12,600

= 59,950

August purchase = Materials purchased × Cost per kilogram

= 59,950 × $25

= $1,498,750

Therefore for computing the august purchase we simply multiply material purchased with cost per kilogram.