Hale Co Manufactures Beanies

Hale Co. manufactures beanies. The budgeted units to be produced and sold are below:
It takes 24 yards of yarn to produce a beanie. The company's policy is to maintain yarn at the end of each month equal to 5% of next month's production needs and to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated production needs. The cost of yarn is $0.20 a yard. At August 1, 3,720 yards of yarn were on hand.
Instructions
Compute the budgeted cost of purchases.

Correct Answer:

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