Coles Company, Inc, makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows:
Units14,00014,50015,50012,60011,900
The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month's production needs. On July 31, tthis requirement was not met since only 2,500 yards of Material K were on hand. The cost o material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. The total cost of Material K to be purchased in August is:.
a. $40,970
b. $48,200
c. $33,840
d. $42,300