Question

Assume the sales budget for April and May is 46,000 units and 48,000 units, respectively. The production budget for the same two months is 43,000 units and 44.000 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 25% of the following month's production needs. How many pounds of raw material need to be purchased in April? Multiple Choice a. 172,500 b. 173,000

Answer 1

To find out how many pounds of raw material need to be purchased in April, calculate the raw materials needed for April's production and the raw materials inventory needed for May's production.

Step-by-step explanation:

To determine how many pounds of raw material need to be purchased in April, we need to calculate the raw materials needed for April's production and the raw materials inventory needed for May's production. Let's start with April: April's production is 43,000 units and each unit requires 4 pounds of raw materials, so the total raw materials needed for April's production is 43,000 units * 4 pounds/unit = 172,000 pounds. The raw materials inventory needed for May's production is 25% of May's production needs, which is 25% * 44,000 units * 4 pounds/unit = 44,000 pounds. Therefore, the total pounds of raw material that need to be purchased in April is 172,000 pounds + 44,000 pounds = 216,000 pounds.