Question

Carter production Inc's required production for the first six month of the year is as follows:

Month / Required Production
Jan 50,000
Feb 70,000
March 85,000
April 105,000
May 110,000
June 120,000
Each unit requires 2 pounds of material. Management believes that an appropriate ending inventory is 20% of next month's production needs. Calculate the pounds of material to be purchased in April

Answer 1

In April, Carter production Inc needs to purchase 212,000 pounds of material, after accounting for production requirements and maintaining the appropriate inventory levels.

Step-by-step explanation:

The student seeks to calculate the pounds of material that Carter production Inc needs to purchase in April. This requires an understanding of inventory levels and material requirements in a business and production context.

First, we calculate April's required production material: 105,000 units * 2 pounds/unit = 210,000 pounds.

Next, we calculate May's ending inventory which is 20% of its production: 110,000 units * 20% = 22,000 units * 2 pounds/unit = 44,000 pounds.

April's starting inventory should be the ending inventory of March, which is 20% of April's production: 105,000 units * 20% = 21,000 units * 2 pounds/unit = 42,000 pounds.

Finally, we calculate the material to purchase in April: (April's required material + May's ending inventory) - April's starting inventory = (210,000 pounds + 44,000 pounds) - 42,000 pounds = 212,000 pounds to be purchased.