Zhang Industries budgets production of 300 units in June and 310 units in July.Each finished unit requires 4 pounds of raw material K,which costs $5 per pound.Each month's ending inventory of raw materials should be 30% of the following month's budgeted production.The June 1 raw materials inventory has 360 pounds of raw material K.Compute the budgeted cost of purchases for raw material K for June.

A) $4,400.
B) $6,000.
C) $6,200.
D) $6,060.
E) $6,100.

Question

Vanessa Sartor · Accepted Answer

Final Answer : D, Explanation :  To determine the budgeted cost of purchases for raw material K for June, we need to calculate the amount of raw material K needed for production, as well as the desired ending inventory for July.- Production needs: 4 pounds per unit x 300 units = 1,200 pounds- Desired ending inventory for July: 30% of 310 units x 4 pounds per unit = 372 poundsTherefore, the total amount of raw material K needed for June and July is:1,200 + 372 - 360 (beginning inventory) = 1,212 poundsThe budgeted cost of purchases is then:1,212 pounds x $5 per pound = $6,060So the correct answer is D.

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