Sunrise Poles manufactures hiking poles and is planning on producing 3,646 units in March and 4,395 in April. Each pole requires a half pound of material, which costs $1.17 per pound. The company’s policy is to have enough material on hand to equal 7% of the next month’s production needs and to maintain a finished goods inventory equal to 17% of the next month’s production needs. What is the budgeted cost of purchases for March? Round to the nearest penny, two decimal places.
Sunrise Poles manufactures hiking poles and is planning on producing 3,646 units in March and 4,395 in April. Each pole requires a half pound of material, which costs $1.17 per pound. The company’s policy is to have enough material on hand to equal 7% of the next month’s production needs and to maintain a finished goods inventory equal to 17% of the next month’s production needs. What is the budgeted cost of purchases for March? Round to the nearest penny, two decimal places.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sunrise Poles manufactures hiking poles and is planning on producing 3,646 units in March and 4,395 in April. Each pole requires a half pound of material, which costs $1.17 per pound. The company’s policy is to have enough material on hand to equal 7% of the next month’s production needs and to maintain a finished goods inventory equal to 17% of the next month’s production needs. What is the budgeted cost of purchases for March? Round to the nearest penny, two decimal places.
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Step 1
Material cost means the cost which is directly incurred on the purchase of the raw material. It is used to make the goods. It is a direct cost involved in the process of production.
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