Question

Masterson Company's budgeted production calls for 68,000 units in April and 64,000 units in May of a key raw material that costs $1.70 per unit. Each month's ending raw materials inventory should equal 25% of the following month's budgeted materials. The April 1 inventory for this material is 17,000 unit. What is the budgeted materials needed in units for April?

Answer 1

The budgeted materials needed in units for April = 67000 litres

Step-by-step explanation:

The budgeted production for April = 68000 units

The budgeted production for may = 64000 units

The cost of raw material per unit = $1.70 per unit

It is given that at the end of each month the inventory should be = 25%

The April 1 inventory = 17000 units

Now calculate the material required for April production:
`= [ Materials needed + ending inventory requirements - beginning inventory available ]`
`= [ 68000 + (64000 × 25%) – 17000 ] = 67000 Litres`

Therefore, the budgeted materials needed in units for April = 67000 litres