Question

The following are budgeted data:Two pounds of material are required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. Purchases of raw materials for May should be: A. 39,200 poundsB. 52,000 poundsC. 36,800 poundsD. 38,000 pounds

Answer 1

C. 36,800 pounds

Step-by-step explanation:

The computation of the purchase of raw material is shown below

The Material used in May is 38,000 pounds (19000 × 2pounds)

Add: Ending balance of Material needed 6,400 {(16,000 × 2) ×20%

Less: opening balance of material -$7,600 [(19,000 × 2) × 20%)}

So,

Purchases of raw materials for May is 36800 pounds

Hence, the correct option is c. 36,800 pounds