On January 1, Bandy Manufacturing Plans to Introduce a Product

question 34

Multiple Choice

On January 1, Bandy Manufacturing plans to introduce a product called Handy Dandy. The company plans to sell each unit of Handy Dandy for $25.00. Management has forecast the following in sales units for the first three months.
Each unit of Handy Dandy requires 2 kg of Dingaling and 1 hour of direct labour. Management wants to end each month with a Handy Dandy inventory level equal to 10 per cent of the following month's sales, and a Dingaling inventory equal to 5 per cent of the following month's production. Dingaling can be purchased for $3 per kg and direct labour costs are estimated to be $5.00 per hour. How many kilograms of Dingaling should be purchased in January? Bandy plans to have no inventory of Dingaling on January 1:

• A) 78 520
• B) 72 800
• C) 72 680
• D) 78 400

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Definitions:

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