Question

A company requires 100 pounds of plastic to meet the production needs of a small toy. It currently has 10 pounds of plastic inventory. The desired ending inventory of plastic is 30 pounds. How many pounds of plastic should be budgeted for purchasing during the coming period?

a. 80 pounds
b. 110 pounds
c. 120 pounds
d. 130 pounds
e. None of these.

Answer 1

The company should budget to purchase 120 pounds of plastic. This is calculated by adding the production needs of 100 pounds and desired ending inventory of 30 pounds to get 130 pounds total needed, then subtracting the current inventory of 10 pounds.Answer is option c.

Step-by-step explanation:

To calculate how many pounds of plastic should be budgeted for purchasing, you need to consider the company's production needs, current inventory, and the desired ending inventory. The company requires 100 pounds for production and wants an ending inventory of 30 pounds. They currently have 10 pounds in inventory.

First, calculate the total amount of plastic needed for production and ending inventory by adding the two amounts together:

• Plastic for production: 100 pounds
• Desired ending inventory: 30 pounds
• Total needed: 100 pounds + 30 pounds = 130 pounds

Next, subtract the current inventory to find out how much more plastic needs to be purchased:

• Total needed: 130 pounds
• Minus current inventory: 10 pounds
• Plastic to be purchased: 130 pounds - 10 pounds = 120 pounds

So, the company should budget to purchase 120 pounds of plastic.