Cashan Corporation Makes and Sells a Product Called a Miniwarp

question 82

Multiple Choice

Cashan Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 1.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows: The company wants to maintain monthly ending inventories of Jurislon equal to 30% of the following month's production needs. On July 31, this requirement was not met since only 10,400 kilograms of Jurislon were on hand. The cost of Jurislon is $4.00 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months. The total cost of Jurislon to be purchased in August is:

• A)$149,860
• B)$252,400
• C)$191,460
• D)$147,000

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Definitions:

Athletic Shoes

Footwear designed specifically for sports or other forms of physical exercise.

Risk-Free Rate

The theoretical rate of return on an investment with no risk of financial loss, typically associated with government bonds.

Inflation Rate

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Initial Cost

The amount of money spent to acquire or invest in an asset at the beginning of its life.