Question

Direct materials inventories are kept in pounds for Cat Company, and the total pounds needed for production in the current period is 14,000. If the beginning inventory is 2,000 pounds and the desired ending inventory is 2,500 pounds, how many total pounds should be purchased. Group of answer choices 14,000 16,500 14,500 16,000

Answer 1

Answer:

The correct answer is:

14,500 pounds

Explanation:

First of all, let us lay out the information clearly:

requirement for production = 14,000 pounds

beginning inventory = 2,000 pounds

ending inventory = 2,500 pounds

Next, let us calculate the total inventory required by the business during the period, as shown below:

Total inventory required = inventory required for production + ending inventory = 14,000 + 2,500 = 16,500 pounds.

Finally, putting the beginning inventory into consideration, it means that out of the total 16,500 pounds required, Cat Company has 2,000 already, hence will reduce purchase by 2,000 pounds. Therefore, total purchase is calculated as:

Total purchase = Total inventory required - beginning inventory

= 16,500 - 2,000 = 14,500