Crafty Cathy Products Inc.manufactures a product sold in most craft stores which requires non-soluble glue as one of the key ingredients.The company has already estimated that it needs to produce the following number of units of product for the second quarter of 2009:
$\begin{array}{ll}
\text { April } & 75000 \text { units } \
\text { May } & 90000 \text { units } \
\text { June } & 84000 \text { units }
\end{array}$

Each unit requires .5 grams of glue at a cost of $.30 a gram.The company has determined that it needs 15 per cent of next month's raw material needs on hand at the end of each month.
The cost of the glue that should be purchased in May is:

Question

Crafty Cathy Products Inc.manufactures a product sold in most craft stores which requires non-soluble glue as one of the key ingredients.The company has already estimated that it needs to produce the following number of units of product for the second quarter of 2009:
$\begin{array}{ll}
\text { April } & 75000 \text { units } \
\text { May } & 90000 \text { units } \
\text { June } & 84000 \text { units }
\end{array}$

Each unit requires .5 grams of glue at a cost of $.30 a gram.The company has determined that it needs 15 per cent of next month's raw material needs on hand at the end of each month.
The cost of the glue that should be purchased in May is:

Quizplus · Accepted Answer

The company needs 15% of next month's raw material needs on hand at the end of each month. So, for May, the company needs 15% of June's needs, which is 0.15 * 84000 * 0.5 = 6300 grams. The company also needs 90000 * 0.5 = 45000 grams for May's production. So, the total glue needed for May is 6300 + 45000 = 51300 grams. The cost of the glue is $0.30 per gram, so the total cost of the glue needed for May is 51300 * 0.30 = $15390.

Crafty Cathy Products Inc Each Unit Requires