The Porch Cushion Company manufactures foam cushions. The number of cushions to be produced in the upcoming three months follows:

Number of foam cushions to be produced in July

13, 000

Number of foam cushions to be produced in August

12, 000

Number of foam cushions to be produced in September

14, 000

Each cushion requires 2 pounds of the foam used as stuffing. The company has a policy that the ending inventory of foam each month must be equal to 25% of the following month's expected production needs. How many pounds of foam does The Porch Cushion Company need to purchase in August?

A. 18,000

B. 25, 000

C. 30,000

D. 31, 000

The correct answer is B.

Explanation:

Giving the following information:

Number of foam cushions to be produced in July

13, 000

Number of foam cushions to be produced in August

12, 000

Number of foam cushions to be produced in September

14, 000

Each cushion requires 2 pounds of the foam used as stuffing. The company has a policy that the ending inventory of foam each month must be equal to 25% of the following month's expected production needs.

Purchase for August:

Units sales = 12,000*2 = 24,000 pounds

Ending inventory = (14,000*0.25*2) = 7,000 pouds

Beginning inventory = (12,000*0.25*2) = 6,000 pounds (-)

Total = 25,000 pounds