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A manufacturing company has budgeted production at 5,000 units for may and 4,400 units in June....

A manufacturing company has budgeted production at 5,000 units for may and 4,400 units in June. Each unit requires 3 pounds of materials at a cost of $10 per pound. on May 1, there are 2,750 pounds of materials on hand. The company desires an ending inventory of 60% of the next month’s materials requirements. The total cost of direct materials purchases for May will be $___.
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Answer #1
Particulars May June
Production             5,000           4,400
x Raw material per unit                     3                  3
Raw materials required           15,000        13,200
Add closing inventory             7,920
Total raw material required           22,920
Less opening balance             2,750
Raw material purchases           20,170
x cost per pound                  10
Purchase cost        201,700
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