Question

Sledge Co. manufactures a product requiring 1.5 lbs. of raw material for each finished unit. The beginning inventory of raw materials in March was 5,000 lbs. The company wants an inventory of 2,500 lbs at the end of March. Production for March will be 4,000 units. How many lbs. of raw material must be purchased in March

Answer 1

Answer:

Sledge Co./

3,500 Ibs. of raw materials must be purchased in March.

Explanation:

a) Data and Calculations:

Purchases of raw materials:

Expected ending inventory =                     2,500 Ibs.

Production for March (4,000 x 1.5 Ibs.) =   6,000 Ibs.

Raw materials available for production =  8,500 Ibs.

Less beginning inventory =                        5,000 Ibs.

Purchases =                                                 3,500 Ibs.

b) The units to be purchase is the difference between raw materials expected to be available for production and the beginning inventory.  Since the expected ending inventory is 2,500 Ibs. and the units to be produced during March is 4,000 units, which will use 6,000 Ibs (4,000 * 1.5 Ibs.), therefore, the total units of raw materials required is 8,500 Ibs.  When the inventory of raw material is taken away, the difference is the Purchases of materials to be made during March.

Answer 2

Answer:

Purchases= 3,500lbs

Explanation:

Giving the following information:

Production= 4,000*1.5= 6,000 lbs

Beginning inventory= 5,000 lbs

Ending inventory= 2,500 lbs

To calculate the direct materials purchase, we need to use the following formula:

Purchases= production + desired ending inventory - beginning inventory

Purchases= 6,000 + 2,500 - 5,000

Purchases= 3,500lbs