Haft construction company determines that 54,000 pounds of direct materials are needed for production in july. there are 3,200 pounds of direct materials on hand at july 1 and the desired ending inventory is 2,800 pounds. if the cost per unit of direct materials is $3, what is the budgeted total cost of direct materials purchases?

cost of direct materials purchases   160,800

Explanation:

pounds required for production      54,000

desired ending inventory                    2,800

total needs                                         56,800

beginning inventory                           (3,200)

units to be purchased                        53,600

cost per unit of direct materials                  3

cost of direct materials purchases   160,800

Notes:

The pounds for production and the ending inventory are the raw materials demand.

The beginning inventory is a portion we already have, so we need to purchase less.

Then, we multiply the pounds to be purchased by their cost to get the total cost for direct materials

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.