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Homework answers / question archive / Cape Corporation sells a single product
Cape Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 98,000 units, and desired ending inventory is 80,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.
Material A .50 lb. per unit. @ $0.60 per pound
Material B1.00 lb. per unit @ $1.70 per pound
Material C1.20 lb. per unit @ $1.00 per pound
The amount of direct material B purchased during the year is:
a.$1,390,600.
b.$1,088,000.
c.$1,057,400.
d.$1,224,000.
Computation of Amount of Direct Material B purchased during the year:
Total purchases = Sales + Closing inventory - Beginning inventory = 640,000 + 80,000 - 98,000 = 622,000 units
For Material B:
1 lb. for every unit @1.70 per pound
Total pound used = 622,000 pounds
So,
Amount of Direct Material B purchased during the year = 622,000*1.7 = $1,057,400
So, the correct option is C "$1,057,400".
