Question
FRANCORP Company is preparing budgets for the quarter ending March 30. Budgeted sales for the next four months are: January 35,000 units; February 50,000 units;
FRANCORP Company is preparing budgets for the quarter ending March 30. Budgeted sales for the next four months are: January 35,000 units; February 50,000 units; March 45,000 units and April 55,000 units.
At FRANCORP, 6kg of material are required per unit of product. As well, management wants materials on hand at the end of each month to equal 25% of the following months production. On December 31st, 12,500 kg of material are on hand. Assume required production needs for April are 50,000 units. Material cost is $0.55 per kg. Determine the cost of the materials needed to be purchased for the entire quarter ending March 30.
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