Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 10.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows:August 24,300 unitsSeptember 23,000 unitsOctober 24,400 unitsNovember 25,600 unitsDecember 25,300 unitsThe company wants to maintain monthly ending inventories of Jurislon equal to 25% of the following month's production needs. On July 31, this requirement was not met since only 12,500 kilograms of Jurislon were on hand. The cost of Jurislon is $24 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months. The total cost of Jurislon to be purchased in August is:

$7,272,600

Explanation:

To calculate cost of jurislon in August, we need the following data;

Budgeted production needs:

AUGUST = 24,300 UNITS

SEPTEMBER = 23,000 UNITS

Ending inventory = 25% of the following month(September) production need.

Hence,

August ending inventory = 0.25 × 23,000 = 5,750 Units

Actual budget = 24,300 units

Note: 1 miniwarp = 10.5kg of jurislon

Beginning inventory(july ending inventory) = 12,500kg of jurislon

August ending inventory requires : 5,750 × 10.5 = 60, 375kg of jurislon

Actual budget requires : 24,300 × 10.5 = 255,150kg of jurislon

Actual budget + ending inventory - beginning inventory

255,150kg + 60,375kg - 12,500kg = 303,025kg

Cost of jurislon per kg = $24

Therefore, cost of jurislon to be purchased in August =

303,050kg × $24 = $7,272,600

answer the amount a seller is paid minus the cost of production;