Question

# Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 6.5 kilograms of...

Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 6.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows:

August 23,000 units 21,700 units 23,100 units 24,300 units 24,000 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 11,200 kilograms of Jurislon were on hand. The cost of Jurislon is \$22 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
 Answer Correct Answer = \$3,663,220 August A Budgeted production 23,000 B = A x 6.5 kgs Total raw material required 149,500 C = 21700 units x 6.5 x 20% Desired ending raw material inventory 28,210 D Beginning raw material inventory 11,200 E = B+C-D Raw material to be purchased 166,510 F Cost per kg \$              22 G = E x F Total cost to be purchased in Aug \$ 3,663,220
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