Barry CoManufactures Leather Briefcases and Carryalls

question 98

Multiple Choice

Barry Co.manufactures leather briefcases and carryalls.Barry's production manager has provided the following production budget.Each briefcase or carryall requires 1.2 yards of leather fabric and Barry maintains an ending inventory of leather fabric equal to 25% of the next month's production needs.
If each yard of leather fabric costs $8.60,how much should Barry budget for purchases of fabric in April?

• A) $784,320
• B) $629,520
• C) $619,200
• D) $524,600

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Definitions:

Fair Value Hedge

A hedge that protects against changes in the fair value of an asset or liability or an unrecognized firm commitment.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Mexican Pesos

The currency of Mexico, represented by the symbol $ or MXN, used for all financial transactions within the country.

Forward Contract

A customized contractual agreement to buy or sell an asset at a specified price on a future date, used to hedge against price movements.