Question

Use the information below for August production to answer the question that follow.

Production estimates for August are as follows:

Estimated inventory (units), August 1 12,000
Desired inventory (units), August 31 9,000
Expected sales volume (units), August 75,000

For each unit produced, the direct materials requirements are as follows:

Material A ($5 per lb.) 3 lb.
Material B ($18 per lb.) ½ lb.

The number of pounds of Material A and Material B required for August production is

a. 234,000 lb. of A; 39,000 lb. of B

b. 225,000 lb. of A; 37,500 lb. of B

c. 216,000 lb. of A; 72,000 lb. of B

d. 216,000 lb. of A; 36,000 lb. of B

Answer 1

The number of pounds of Material A and Material B required for August production is 216,000 lb. of A; 36,000 lb. of B.

Step-by-step explanation:

The number of pounds of Material A and Material B required for August production is 216,000 lb. of A; 36,000 lb. of B.

To calculate the total pounds of Material A required, we can use the following formula:

Total pounds of Material A = Estimated inventory on August 1 + Expected sales volume - Desired inventory on August 31.

Substituting the given values, we get: Total pounds of Material A = 12,000 + 75,000 - 9,000 = 78,000 lb.

Similarly, to calculate the total pounds of Material B required, we can use the same formula:

Total pounds of Material B = Estimated inventory on August 1 + Expected sales volume - Desired inventory on August 31.

Substituting the given values, we get: Total pounds of Material B = 12,000 + 75,000 - 9,000 = 78,000 lb.

Answer 2

To calculate the materials needed for August production, subtract the estimated start-of-month inventory from the sum of expected sales and desired end-of-month inventory to find the production quantity. Multiply this by the per-unit material requirements to find out that 216,000 lb of Material A and 36,000 lb of Material B are needed, corresponding to option (d).

Step-by-step explanation:

The question asks about the quantity of materials required for August production based on the estimated and desired inventory levels and the expected sales volume. Specifically, we're determining the need for Material A and Material B given their usage per unit produced.

First, calculate the total units to be produced in August: Begin with the expected sales volume of 75,000 units and add the desired end-of-August inventory of 9,000 units. Then, subtract the estimated beginning-of-August inventory of 12,000 units. The result is the total units to be produced in August. For Material A, multiply the per-unit requirement of 3 lb by the total units to be produced. For Material B, multiply the per-unit requirement of 0.5 lb by the total units to be produced.

The total materials required for August production are calculated as follows:

• Total Units to Produce = Expected Sales + Desired End Inventory - Beginning Inventory
• Total Units to Produce = 75,000 + 9,000 - 12,000 = 72,000 units
• Material A needed = Total Units to Produce × 3 lb/unit = 72,000 × 3 = 216,000 lb
• Material B needed = Total Units to Produce × 0.5 lb/unit = 72,000 × 0.5 = 36,000 lb

Therefore, the number of pounds of Material A and Material B required for August production is 216,000 lb of A and 36,000 lb of B, which corresponds to option (d).