Question

Mandy Corporation sells a single product. Budgeted sales for the year are anticipated to be 639,000 units, estimated beginning inventory is 107,000 units, and desired ending inventory is 82,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.

Material A: 0.50 lb. per unit @ $0.74 per pound
Material B: 1.00 lb. per unit @ $2.22 per pound
Material C: 1.20 lb. per unit @ $1.29 per pound

The dollar amount of Material B used in production during the year is

a.$2,044,620

b.$1,635,696

c.$1,090,464

d.$1,363,080

Answer 1

Following is the formula for finding production budget

Production budget =( budget sales in unit + ending finished goods inventory ) - beginning finished goods inventory

Production budget = ( 639,000 + 82,000 ) - 107,000 = 614,000 units

Material B required for 1 unit is 1 which cost 2.22 per pound

Material B requirement in unit

= 614000 × 1 = 614,000

Material B cost = 614000 × 2.22 = 1,363,080

The dollar amount of material B used in production is $1,363,080.

The above are the detailed calculations,equations and explanations

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