J. J. Johnson has decided to supplement his income by selling beehives. He expects to sell 25,000 hives in 2010. He ended 2009 with 2,500 completed hives in inventory and would like to complete operations in 2010 with at least 2,800 completed hives in inventory. There is no ending work in process inventory. One beehive holds about 250 bees. The bees are purchased for $4.00 per 1,000 bees. The hives sell for $15.00 each. What would be the yearly total on the direct materials purchases budget for bee purchases? (Assume for this question that 40,000 beehives will be produced.)

Question

Quizplus · Accepted Answer

To produce 40,000 beehives, each holding 250 bees, J. J. Johnson needs 10,000,000 bees (40,000 hives * 250 bees). At $4.00 per 1,000 bees, the cost is $40,000 (10,000 * $4).

J J Johnson Has Decided to Supplement His Income by Selling