Yummy Jams Company produces a line of jams. Yummy's estimated production of jars of jam for the fourth quarter of the year is as follows:October75,000November98,000December63,000Each jar requires half a pound of berries. Yummy prefers to buy the freshest berries, so its policy is to have just 3% of the following month's production needs in ending inventory. On October 1, the company had 1,125 pounds of berries in inventory. Yummy's pays $0.60 per pound of berries. It buys all berries on account and typically pays 40% of a month's purchases in that month, and the remaining 60% the following month. How many pounds of berries will be purchased during the month of November?a.41,950b.48,475c.49,945d.23,375e.39,925

Beginning Stock in November Month = estimated production for November x berries required per unit x inventory % required = 98000/2 * 3% = 1470Ending Stock in November Month = estimated production for December x berries required per unit x inventory % required = 63000/2 * 3% = 945 berries required for November month production = estimated production for November x berries required per unit = 98000 x 1/2 = 49000 pounds Purchases = Berries required for November month production +Ending Stock in November Month - Beginning Stock in November Month = 49000 pounds + 945 - 1470 = 48,475 pounds Option b. is the correct answer.

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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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Yummy Jams Company produces a line of jams. Yummy's estimated production of jars of jam for the fourth quarter of the year is as follows:

October 75,000

November 98,000

December 63,000

Each jar requires half a pound of berries. Yummy prefers to buy the freshest berries, so its policy is to have just 3% of the following month's production needs in ending inventory. On October 1, the company had 1,125 pounds of berries in inventory. Yummy's pays $0.60 per pound of berries. It buys all berries on account and typically pays 40% of a month's purchases in that month, and the remaining 60% the following month. How many pounds of berries will be purchased during the month of November?

a.41,950

b.48,475

c.49,945

d.23,375

e.39,925

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