Question

Stefanovich Corporation makes one product. The company has provided the following information concerning its raw materials needs:

The ending raw materials inventory should equal 20% of the following month’s raw materials production needs.

Each unit of finished goods requires 2 pounds of raw materials.

The raw materials cost $3.00 per pound.

The company will need 26,440 pounds of raw material to satisfy production needs in March.

The raw materials inventory balance at the end of February should be closest to:

A) $74,136

B) $14,568

C) $88,704

D) $15,864

Answer 1

	Ending raw materials inventory for February = Beginning raw materials inventory for March = 26,440 * 20% = 5288 pounds Cost = 5288 * 3 per pound = $15,864