Question

The following are budgeted data:Sales (units ) Production (units)April 15,000 18,000May 20,000 19,000June 18,000 16,000Two pounds of material is required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs.Purchases of raw materials for May should be:a.36,800 poundsb.39,200 poundsc.52,000 poundsd.38,000 pounds

Answer 1

Answer:

Total= 36,800 pounds

Explanation:

Giving the following information:

Sales (units ) - Production (units):

May: 20,000 - 19,000

June: 18,000 - 16,000

Two pounds of material is required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs.

Purchases for May= production for the month + desired ending inventory - beginning inventory

Production= 19,000*2 pounds= 38,000 pounds

Desired ending inventory= (16,000*2)*0.2= 6,400 pounds

Beginning inventory= (38,000*0.2)= (7,600)

Total= 36,800 pounds