Question:
Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows:
August 30,600 units
September 18,800 units
October 31,800 units
November 26,500 units
December 29,000 units
The company wants to maintain monthly ending inventories of Jurislon equal to 17% of the following month's production needs. On July 31, this requirement was not met since only 10,400 kilograms of Jurislon were on hand. The cost of Jurislon is $19 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months.
The total cost of Jurislon to be purchased in August is:
$1,438,310
$1,407,710
$1,415,700
$1,484,210