Stefanovich Corporation makes one product. The company has provided the following information concerning its raw materials needs:The ending raw materials inventory should equal 20% of the following month's raw materials production needs.Each unit of finished goods requires 2 pounds of raw materials.The raw materials cost $3.00 per pound.The company will need 26,440 pounds of raw material to satisfy production needs in March.The raw materials inventory balance at the end of February should be closest to:

Question

Quizplus · Accepted Answer

The ending raw materials inventory for February should equal 20% of March's raw materials needs. March needs 26,440 pounds, so the inventory should be 20% of that, which is 5,288 pounds. At $3.00 per pound, the cost is 5,288 pounds * $3.00/pound = $15,864.

Stefanovich Corporation Makes One Product