Question

Alana Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2. Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning inventory is 4,000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months.
How many units of A1 does Alana Company expect to use in production during the second month?
A) 12,000 units
B) 12,500 units
C) 10,000 units
D) 10,750 units

Answer 1

Answer:

Direct material used (A1)= 12,500 units

Explanation:

To calculate the units of A1 used in the second month of production, we need to use the following formula:

Direct material used= beginning inventory + production - ending inventory

Beginning inventory= (4,000 - 500)= 3,500

Production= 10*1,200= 12,000

Ending inventory= (3,500 - 500)= 3,000

Direct material used (A1)= 3,500 + 12,000 - 3,000

Direct material used (A1)= 12,500 units