Question

The following are budgeted data: January February March Sales in units 16,100 22,200 19,100 Production in units 19,100 20,100 18,600 One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 30% of the following month's production needs. Purchases of raw materials for February would be budgeted to be:

Answer 1

Purchases= 19,650 pounds

Step-by-step explanation:

Giving the following formula:

Production in units:

February= 20,100

March= 18,600

One pound of material is required for each finished unit.

The inventory of materials at the end of each month should equal 30% of the following month's production needs.

To calculate the purchase of raw material for February, we need to use the following formula:

Purchases= production + desired ending inventory - beginning inventory

Purchases= 20,100 + (18,600*0.3) - (20,100*0.3)

Purchases= 19,650 pounds