Question

Pablo Company has budgeted production for next year as follows:QuarterFirst Second Third FourthProduction in units 48,000 88,000 98,000 78,000Three pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 38,000 pounds of material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be:72,500 pounds.330,000 pounds.271,500 pounds.337,500 pounds.

Answer 1

271,500 pounds

Step-by-step explanation:

Given:

Quarter FIRST SECOND THIRD FOURTH

Production in unit 48000 88000 98000 78000

Raw material per unit 3 3 3 3

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Thus,

Need for material = Production in unit × Raw material per unit

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Quarter FIRST SECOND THIRD FOURTH

Need for material in production 144,000 264,000 294,000 234,000

Desired ending inventory = 25% of next quarter's production needs for material

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ADD:

Desired ending inventory 66000 73500 58500

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Total need of material = Need for material in production + Desired ending inventory

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Quarter FIRST SECOND THIRD FOURTH

Total need of material = 210,000 337,500 352,500

Beginning inventory 38000 66000 73500

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Total purchase = Total need of material - Beginning inventory

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Quarter FIRST SECOND THIRD FOURTH

Total purchase = 172,000 271,500 279,000

Hence,

The answer is 271,500 pounds