Answered: Compute the cost of total purchases in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Shalom Company manufactures Product Peace. Each unit requires 3 kilos of raw material at a cost of P1.80 per kilo. The company's budget for second quarter and July production is shown below:

April May June July

Units 12,000 13,500 12,400 11,200

Starting April, Shalom wants to maintain several kilos of raw material as ending inventory equal to 15% of the following month's production needs. The company wanted to implement this since last quarter, there were instances of stockouts of raw materials. At the end of first quarter, only 3,000 kilos were available.

Compute the cost of total purchases in quarter 2.

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