Question

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Jordan Company makes and sells a single product. It takes five pounds of direct materials to produce one unit of this product. The budgeted units to be produced for the next four months is given be low: September October November December Budgeted Units to be produced 31,900 units 22,400 units 26,100 units 34,600 units Jordan Company wants to maintain monthly ending inventori es of direct materials that are equal to 24% of the following month's production needs. The cost of direct materials is $2.75 per pound. Calculate the total cost of direct materials budgeted to be purchased in November

Answer 1

Particulars	Oct	Nov	Dec
Units to be produced	22400	26100	34600
Pounds required for each unit	4	4	4
Total direct material required for production	89600	104400	138400
Add: Ending raw material inventory to be Maintained @ 24% of next month production needs	25056	33216
Less: Beginning a raw material inventory	-89600	-25056
Total raw material to be purchased in Nov		112560
Cost of raw material per pound		2.75
Total cost of direct materials to be purchased		309540