Question

Blaylock plans to sell 85,000 units of product no. 794 in May, and each of these units requires three units of raw material. Pertinent data follow. Product No. 794 Raw Material Actual May 1 inventory 11,000 units 29,000 units Desired May 31 inventory 17,000 units 20,000 units On the basis of the information presented, how many units of raw material should Blaylock purchase for use in May production

Answer 1

Answer:

Purchases=  264,000 units

Explanation:

Giving the following information:

Product N°794:

Sales= 85,000 units

Beginning inventory= 11,000

Ending inventory= 17,000

Raw materials:

Standard raw material per unit= 3 units

Beginning inventory= 29,000 units

Ending inventory= 20,000 units

First, we need to calculate the total production for May:

Production= sales + desired ending inventory - beginning inventory

Production= 85,000 + 17,000 - 11,000

Production= 91,000 units

Now, purchases of raw material for May:

Purchases= production + desired ending inventory - beginning inventory

Purchases=  91,000*3 + 20,000 - 29,000

Purchases=  264,000 units