Question

General Manufacturing expects to have 40,000 pounds of raw materials inventory on hand on June 30, the end of the current year. The company has budgeted the following production for the first four months of the coming year: July August September October Production (units) 100,000 120,000 150,000 110,000 General Manufacturing desires each month's ending raw materials inventory to be 20% of the following month's production needs. A finished unit requires two pounds of raw materials. General Manufacturing's budgeted purchases of materials for September is:

Answer 1

Raw material to be purchased 208,000

Step-by-step explanation:

The computation of the budgeted purchases of materials for September is shown below:

Productions requirement (100,000 × 2) 200,000

Add: desired ending inventory (120,000 × 2 × 20%) 48,000

Less: beginning direct material 40,000

Raw material to be purchased 208,000