Problem - Orr Company makes and sells a single product called a Bik. It takes three yards of Material A to make one Bik. Budgeted production of Biks for the next three months is as follows:
Budgeted Biks to be Produced
February 15,000 units
March 18,000 units
April 17,000 units
The company wants to maintain monthly ending inventories of Material A equal to 20% of the next month's production needs. The cost of material A is $1.25 per yard. The company is in the process of preparing a direct materials purchases budget.
Calculate the total cost of material A budgeted to be purchased in March. Do not use decimals in your answer.