H has a budgeted production for the next budget year of 12,000 units spread evenly over the year. It expects the same production level to continue for the next two years. Each unit uses 4kg of material. The estimated opening raw material inventory at the start of the next budget year is 3,000kg. H’s future policy will be to hold sufficient raw material inventory at the end of each month to cover 110% of the following month’s production. The budgeted material cost is $8 per kg for purchases up to 49,000kg. The excess of purchases over 49,000kg in a year will be at a cost of $7.50 per kg.

 Calculate the material purchases budget for the year in $.

Answer rating: 100% (QA)

workings 2000 units X 4kg 48000 kg Opening inventory 3000 kg Cl... View the full answer