The Tobler Company had budgeted production for the year as follows:

Quarter 1 2 3 4

Production in units 10,000 9,000 13,000 11,000

4 pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 7,000 lbs. The raw materials inventory at the end of each quarter should equal 9% of the next quarter's production needs in materials. Budgeted purchases of raw materials in the second quarter would be (in lbs.):

A. 37080 lbs

B. 36360 lbs

C. 37440 lbs.

D. 36000 lbs

The correct answer is C.

Explanation:

Giving the following information:

The Tobler Company had budgeted production for the year as follows:

Quarter 1 2 3 4

Production in units 10,000 9,000 13,000 11,000

4 pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 7,000 lbs. The raw materials inventory at the end of each quarter should equal 9% of the next quarter's production needs in materials.

Direct material 2nd quarter:

Production = 9,000*4 = 36,000lbs

Ending inventory = (13,000*0.09) * 4 = 4,680lbs

Beginning inventory = (9,000*0.09) * 4 = 3,240lbs (-)

Total = 37,440 lbs