Bobby Jones Inc. is planning sales of 55,000 units for the next three months. The company has a beginning inventory of 10,000 units and would like to have an ending inventory of 15,000 at the end of the three months. It requires 4 kg of direct materials to make 1 unit of finished product. The opening inventory of direct materials is 50,000 kg and the target ending inventory is 60,000 kg. How many kilograms of direct materials does Bobby Jones need to purchase for the three-month period?
- 250,000 kg
- 60,000 kg
- 110,000 kg
- 132,000 kg
Munch Enterprises makes a small toy car that is voice activated. Projected sales for the next four months are
|
Month |
Planned Sales (Units) |
|
April |
5,500 |
|
May |
6,500 |
|
June |
4,500 |
|
July |
5,600 |
The cars sell for $35 each. To produce each car requires $12.50 in direct materials and $6.00 in direct labour. Fixed overhead costs related to manufacturing the car are $10,000 per month, while variable overhead is $4.50 per car. Munch normally produces a month”s supply of inventory to ensure that it will not fall short in case sales are unexpectedly high. At the end of March, for instance, the company will have inventory to cover April sales.