AMIS 525

Materials Budgeting

A company uses 4 units of material for each unit of its product. Purchased material is 20% defective. Defective units of material are not returnable to the supplier and have no scrap value or disposal cost. Cost of a unit of material is $2.25. What is the budgeted cost of material needed to make 25 units of the company's product?

Solution: Q = 25 => A = 100 A = 100 => purchased = 125 125 * $2.25 = $281.25 Quse = Qbuy - [.2 * Qbuy] 100 = Qbuy - [.2 * Qbuy] 100 = .8 * Qbuy Qbuy = 125

1/9/2014