Question

Carter Production Inc required production for the first six month of the year is as follows

Jan- 50,000
Feb- 70,000
Mar- 85,000
Apr- 105,000
May- 110,000
Jun- 120,000
Each unit requires two pounds of material. Given a desired ending inventory of 20% of the next month's production needs, the pounds of material to be purchased in April is:

Answer 1

Carter Production Inc needs to purchase a total of 254,000 pounds of material for the month of April to meet its production requirements and maintain a desired ending inventory equal to 20% of the next month's production needs.

Step-by-step explanation:

To calculate the pounds of material Carter Production Inc needs to purchase in April, we need to consider both the production requirements of April and the desired ending inventory for that month which is 20% of May's production needs. Since each unit requires two pounds of material and Carter Production Inc plans to produce 105,000 units in April, the company needs 210,000 pounds of material for production. Additionally, 20% of May's production requirement is 22,000 units (20% of 110,000), which translates to 44,000 pounds of material needed for ending inventory. Therefore, the total amount of material required for April is the sum of April's production material needs and the ending inventory for the next month.

Total material required in April = Material for April's production + Material for ending inventory
Total material required in April = 210,000 pounds + 44,000 pounds
Total material required in April = 254,000 pounds