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Cowles Corporation Inc., makes and sells a single product, Product R. Three yards of Material K...

Cowles Corporation Inc., makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows: August 13,000 units September 13,500 units October 14,500 units November 13,600 units December 12,900 units The company wants to maintain monthly ending inventories of Material K equal to 30% of the following month's production needs. On July 31, this requirement was not met because only 3,500 yards of Material K were on hand. The cost of Material K is $0.80 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. The total cost of Material K to be purchased in August is:

  • $51,150

  • $38,120

  • $30,350

  • $24,280

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Answer #1

OPTION - $38,120.

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