A sporting goods manufacturer budgets production of 45,000 pairs of ski boots in the first quarter and 30,000 pairs in the second quarter of the upcoming year.Each pair of boots requires 2 kilograms (kg)of a key raw material.The company aims to end each quarter with ending raw materials inventory equal to 20% of the following quarter's material needs.Beginning inventory for this material is 18,000 kg and the cost per kg is $8.What is the budgeted materials purchases cost for the first quarter?

Question

Quizplus · Accepted Answer

First, we need to calculate the materials needed for production:

First quarter: 45,000 x 2 = 90,000 kg
Second quarter: 30,000 x 2 = 60,000 kg

We also need to calculate the ending inventory for each quarter:

First quarter: 60,000 x 0.2 = 12,000 kg
Second quarter: 90,000 x 0.2 = 18,000 kg

Now, we can calculate the materials purchases needed for each quarter:

First quarter: (90,000 + 12,000 - 18,000) - 18,000 = 66,000 kg
Second quarter: (60,000 + 18,000 - 12,000) - 18,000 = 48,000 kg

Finally, we can calculate the cost of the materials purchases for the first quarter:

66,000 kg x $8/kg = $528,000

Therefore, the answer is B) $672,000.

A Sporting Goods Manufacturer Budgets Production of 45,000 Pairs of Ski