Question

Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 9.5 kilograms of...

Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 9.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows:

August 24,200 units
September 22,900 units
October 24,300 units
November 25,500 units
December 25,200 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 12,400 kilograms of Jurislon were on hand. The cost of Jurislon is $23 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:

Homework Answers

Answer #1
August September
A Budgeted Production of Miniwarps (Units) 24,200 22,900
B Requirement of Jurislon per Miniwarp (kg) 9.5 9.5
C Need of Jurislon (kg) (A*B)            229,900         217,550
D Ending Inventory of Jurislon (20% of sep C)              43,510
E Availability of Jurislon (C+D)            273,410
F Beginning Inventory of Jurislon (kg) 12,400
G Purchases of Jurislon (E-F)            261,010
H Cost of Jurislon per kg $23
I Total Cost of Jurislon to be purchased (G*H) $6,003,230

The total cost of Jurislon to be purchased in August = $6,003,230

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