Answer:
Purchases (in pounds)= 92,550
Total cost= $16,936,650
Explanation:
Giving the following information:
Budgeted production:
2nd quarter= 248,000 units
3rd quarter= 60,500 units
Beginning inventory= 74,400 pounds
Each unit requires 0.60 pounds of raw material
Buying price= $183 per pound.
Desired ending inventory= 50% of next quarter’s budgeted materials.
To calculate the budgeted purchase of raw materials, we need to use the following formula:
Purchases= sales + desired ending inventory - beginning inventory
Purchases (in pounds)= (248,000*0.6) + (60,500*0.6)*0.5 - 74,400
Purchases (in pounds)= 148,800 + 18,150 - 74,400
Purchases (in pounds)= 92,550
Total cost= 92,550*183= $16,936,650
