Flagstaff Company has budgeted production units of 9,300 for July and 9,500 for August. The direct materials requirement per unit is 2 ounces (oz.). The company requires to have safety stock of direct materials on hand at the end of each month to complete 30% of the units of budgeted production in the following month. There was 5,580 ounces of direct material in inventory at the start of July. The total ounces of direct materials to be purchased in July is:

Question

Finley Vance

Business

13 June, 18:53

Flagstaff Company has budgeted production units of 9,300 for July and 9,500 for August. The direct materials requirement per unit is 2 ounces (oz.). The company requires to have safety stock of direct materials on hand at the end of each month to complete 30% of the units of budgeted production in the following month. There was 5,580 ounces of direct material in inventory at the start of July. The total ounces of direct materials to be purchased in July is:

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Answers (1)

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Fiona Clark · Answer 1

18,720 ounces.

Explanation:

Direct material to be purchased:

= (Budgeted production * Raw material required per unit) + Closing inventory - Opening inventory

= (9,300 * 2 ounces) + (30% * 9,500 * 2) - 5,580

= 18,600 + 5,700 - 5,580

= 18,720 ounces.

Therefore, the total ounces of direct materials to be purchased in July is 18,720 ounces.