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
