Kilometer Ltd is a manufacturer of components that are used as parts for heavy motor vehicle engines. The company prepared the following budgeted information for the period April to June 2022: Product Ki (N$) Product Lo (N$) Selling price per unit 500 700 Direct labour (N$30 per hour) 150 210 Direct material A (N$10 per kg) 80 120 Direct material B (N$15 per kg) 75 90 Variable overheads 50 60 Value of opening inventory 75 840 43 540 Product Ki Product Lo Opening inventory units 1 000 800 Closing inventory units 1 000 600 Budgeted production units 10 000 5 800 Additional information: 1. The company total fixed costs are N$2 800 000 for the budget period. 2. Inventory on hand at 31 March 2022 is 12 000 kg of material A and 6 000 kg of material B. 3. Expected closing inventory on 30 June 2022 for both material A and B should be enough to produce 500 units of Product Ki and 400 units of Product Lo. 4. At the budget presentation meeting, the following amendments to the budget were approved: The selling price per unit must be increased by 20% for both products. Raw material price per kg for both material A and B must be increased by 10%. Required: Calculate total value of raw material A needed to be bought to meet production requirement for product Ki & Lo.
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