Question

he following are budgeted data: January February March Sales in units 15,200 20,400 18,200 Production in units 18,200 19,200 17,100 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 February= 18,570 pounds

Step-by-step explanation:

Giving the following information:

Production in units:

January: 18,200

February= 19,200

March= 17,100

One pound of material is required for each finished unit.

Desired ending inventory= 30% of the following month's production needs.

To calculate the purchases for February, we need to use the following formula:

Purchases= production + desired ending inventory - beginning inventory

Purchases= 19,200 + (17,100*0.3) - (19,200*0.3)

Purchases= 18,570 pounds