To solve these question we should use the formula for the physical flow of raw materials inventory to calculate the amount to be purchased for each component (A-9, B-6 and D-28), then use the price of each component to calculate the total amount to be budgeted for April's production. Beginning Inventory + Units Purchased ? Units Used in Production = Ending Inventory For A-9: one unit of A-9 is necessary for each unit of finished product. Plugging numbers for A-9 into the formula we will get the following: 21,000 + Units Purchased ? (400,000 × 1) = 9,000. Solving for Units Purchased, we get Units Purchased = 388,000. The cost to purchase 388,000 units of A-9 is $194,000 ($0.50 × 388,000). For B-6: two units of B-6 are necessary for each unit of finished product. Plugging numbers for B-6 into the formula we will get the following: 32,000 + Units Purchased ? (400,000 × 2) = 10,000. Solving for Units Purchased, we get Units Purchased = 778,000. The cost to purchase 778,000 units of B-6 is $194,500 ($0.25 × 778,000). For D-28: three units of D-28 are necessary for each unit of finished product. Plugging numbers for D-28 into the formula we get the following: 14,000 + Units Purchased ? (400,000 × 3) = 6,000. Solving for Units Purchased, we get Units Purchased = 1,192,000. The cost to purchase 1,192,000 units of D-28 is $1,192,000 ($1.00 × 1,192,000). Adding the costs to purchase all of the components together, we get $1,580,500 ($194,000 + $194,500 + $1,192,000).
This answer is calculated using the units to be produced (400,000) only. It does not take into consideration the beginning and ending inventories of the three raw materials to be used.
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Factory direct labor and variable overhead per unit of C-14 totals $3.00. Fixed factory overhead is $1.00 per unit at a production level of 500,000 units. Superflite plans the following beginning and ending inventories for the month of April and uses standard absorption costing for valuing inventory.
Assume Superflite plans to manufacture 400,000 units in April. The total April budget for all purchased components should be