Question

Tidewater plans to sell 92,000 units of product no. 794 in May, and each of these units requires 3 units of raw material. Pertinent data follow. Product No. 794 Raw Material Actual May 1 inventory 11,700 units 29,700 units Desired May 31 inventory 17,700 units 20,700 units On the basis of the information presented, how many units of raw material should Tidewater purchase for use in May production?

Answer 1

285,000 of raw material

Step-by-step explanation:

Ending balance = beginning balance + purchase - used

17,700 = 11,700 + purchase - 92,000

Purchase = 98,000

Raw material:

= Purchase × 3

= 98,000 × 3

= 294,000

Further, we know that we can have raw material inventory

= 20,700 - 29,700

= 9,000

9,000 less than starting

So, we can just purchase:

= 294,000 - 9,000

= 285,000 of raw material