Question

Budget is being created for next year. Expected production of Q1 = 15201 units; Q 2 = 10597 units Ending inventory of finished goods for each quarter = 25% of the next quarter's budgeted sales in units 4 pounds of raw materials are required for each unit produced. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in materials. 9895 pounds of raw materials in inventory at end of current year. Compute budgeted raw material purchases in pounds for first quarter of next year. Round to the nearest whole pound. Do not round intermediate calculations.

Answer 1

To compute the budgeted raw material purchases in pounds for the first quarter of next year, calculate the production needs in units for each quarter and multiply it by 4 to get the production needs in pounds. Deduct the raw materials inventory at the end of the current year from the production needs in pounds.

Step-by-step explanation:

To compute the budgeted raw material purchases in pounds for the first quarter of next year, we need to calculate the production needs in units for each quarter. The production needs for each quarter can be calculated as 0.25 times the next quarter's budgeted sales in units. So, for Q2, the production needs would be 0.25 times the budgeted sales in Q3.

Since 4 pounds of raw materials are required for each unit produced, we can multiply the production needs in units by 4 to get the production needs in pounds. Finally, we subtract the raw materials inventory at the end of the current year from the production needs in pounds to obtain the budgeted raw material purchases for the first quarter of next year.