Final answer:
To calculate February's budgeted raw material purchases for production, you need to account for February's production requirements, the desired inventory at the end of February, and the ending inventory from January. After completing the calculations, it is determined that 19,500 pounds of raw materials are budgeted to be purchased for February.
Step-by-step explanation:
Budgeting for Material Purchases
The question involves calculating the budgeted purchases of raw materials for manufacturing purposes. Given the data, we know that each final product requires one pound of material and that the ending inventory of materials should equal 20% of the next month’s production needs. To calculate February’s raw materials purchases, we need to follow these steps:
- Determine the amount of materials needed for February’s production: February production is 19,900 units, so 19,900 pounds of material are required.
- Calculate the desired ending inventory for February, which is 20% of March’s production needs: March production is 17,900 units, so the ending inventory should be 20% of 17,900, which equals 3,580 pounds.
- Add the desired ending inventory to February production needs and then subtract January’s ending inventory (to avoid double-counting): January production is 18,900 units, so January’s ending inventory (which is the beginning inventory for February) would be 20% of February’s production needs (20% of 19,900). This equals 3,980 pounds.
- Thus, the total material needed for February is 19,900 + 3,580 - 3,980 = 19,500 pounds.
Therefore, the budgeted raw material purchases for February would be 19,500 pounds.