Each Unit Produced by Terra Electronics Requires 4 Pounds of Raw

question 146

Multiple Choice

Each unit produced by Terra Electronics requires 4 pounds of raw materials. The raw materials inventory must be equal to 10% of the next month's production. Each pound of raw materials costs $2.00. Budgeted production information follows. $\begin{array}{ll}\text { April } & 28,000 \text { units } \\\text { May } & 30,000 \text { units } \\\text { June } & 25,000 \text { units }\end{array}$ How much are budgeted purchases of raw materials for May?

• A) $118,000
• B) $236,000
• C) $221,000
• D) None of the answer choices are correct.

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Definitions:

Price Elasticity

An indicator of the sensitivity of the demand for a product to variations in its price.

Elasticity of Demand

A measure of how the quantity demanded of a good or service responds to a change in its price, indicating the sensitivity of consumers to price changes.

Percentage Change

A mathematical calculation that indicates how much a number has increased or decreased in percentage terms relative to its previous value.

Price Elastic

Describes how sensitive demand for a product or service is to changes in its price; high elasticity indicates significant demand change with price fluctuations.