Question

Jeremy Inc. produces leather handbags. The production budget for the next four months is: July 5,000 units, August 7,000, September 7,500, October 8,000. Each handbag requires 0.5 square meters of leather Jeremy Inc's leather inventory policy is 30% of next month's production needs. If the leather policy is met, what will the July 1 inventory be? o C) 750 square meters o 1825 square meters o 300 square meters o 1050 square meters

Answer 1

Question 1

Correct answer--------750 square meters

The beginning inventory of July will be 30% of production needs of july since that would have been ending inventory of june

	July	August
Budgeted production (units)	5000	7000
Materials requirements per unit	0.5	0.5
Materials needed for production	2500	3500
Budgeted ending inventory	1050
Total materials requirements	3550
Beginning inventory	750

Question 2

Correct answer--------$15,300

Working

	July	August
Budgeted production (units)	5000	7000
Materials requirements per unit	0.5	0.5
Materials needed for production	2500	3500
Budgeted ending inventory	1050
Total materials requirements	3550
Beginning inventory	1000
Materials to be purchased	2550
Cost per square feet	$        6.00
Total budgeted direct materials cost	$       15,300