Question

Cameo Company manufactures boxes. To manufacture a box, it takes 44 units of wood and 2 units of plastic. Scheduled production of boxes for the next two months is 2,100 and 2,500 boxes, respectively. Beginning inventory is 16,000 units of wood and 120 units of plastic. The ending inventory of wood is planned to decrease 4,000 units each of the next two months, and the plastic inventory is expected to increase 20 units each of the next two months. Based on this information, the number of units of wood that Cameo needs to purchase during the first month is:________.

A. 8,000 units
B. 84,000 units
C. 82,000 units
D. 88,400 units

Answer 1

Purchases= 88,400 units

Step-by-step explanation:

Giving the following information:

To manufacture a box, it takes 44 units of wood

The scheduled production of boxes for the next two months is 2,100.

Beginning inventory is 16,000 units of wood

The ending inventory of wood is planned to decrease 4,000 units each of the next two months.

To calculate the purchase of wood required, we need to use the following formula:

Purchases= production + desired ending inventory - beginning inventory

Purchases= 44*2,100 + (16,000 - 4,000) - 16,000

Purchases= 88,400 units