Question

A firm's budgeted production for the month of May is 6,000 units and for the month of June is 10,000 units. Each unit produced requires 5 pounds of raw material. The budgeted ending inventory must equal 30 percent of next month's budgeted production. If the raw materials purchases budgeted for the month of May is 25,000 pounds, the beginning inventory for the month of May is _____ units.

Answer 1

To calculate the beginning inventory for the month of May, subtract the raw material purchases from the total raw material requirement. In this case, the beginning inventory for May is 5,000 pounds.

Step-by-step explanation:

To calculate the beginning inventory for the month of May, we need to determine the raw material requirements for the month. Since each unit produced requires 5 pounds of raw material, the total raw material requirement for May would be 6,000 units x 5 pounds = 30,000 pounds. The budgeted purchases for May is given as 25,000 pounds. So, the beginning inventory for May would be the difference between the total requirement and the purchases, which is 30,000 pounds - 25,000 pounds = 5,000 pounds.