Answer: Option C = 20, 275 pounds
Explanation:
First, the first part of the question is missing and it as follows:
The following are budged data
January February March
Sales in Units 16,600 23,200 19,600
Production in Units 19,600 20,600 19,300
Solution:
The qestion is to deermine Purchases of raw materials for the month of February
The formula is as follows:
Production Units in February x the raw materials required per Unit in Pounds + The Closing inventory - The Opening Inventory of materials
Using the formula we know the following
Productoin Units in February = 20,600
Raw Material required per Unit = 1 pound
Closing Inventory = 25% of March (19,300) = 4,825
Opening Inventory = 25% or February (20,600) = 5,150
Based on the computed figures therefore,
Production Units in February
= 20,600 x 1 pound = 20,600 + 4,825 - 5,150 = 20,275 which is Option C
