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3 March, 23:54

Each unit of finished goods requires 4 pounds of raw materials. The ending finished goods inventory equals 10% of the following month's sales. The ending raw materials inventory equals 40% of the following month's raw materials production needs. If 50,600 pounds of raw materials are required for production in June, then the budgeted raw material purchases for May is closest to:

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  1. 4 March, 01:34
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    42,056 pounds

    Explanation:

    The computation of budgeted raw material purchases is shown below:-

    Budgeted unit sale 8,700

    Add: desired ending inventory 1,260

    (10% * 12,600)

    Total needs 9,960

    Less: Beginning inventory (870)

    (8,700 * 10%)

    Production in may 9,090

    Pounds for material 4

    material for production 36,360

    (9,090 * 4)

    Add: Desired ending inventory

    of raw material 20,240

    (50,600 * 40%)

    Total needs 56,600

    Less: Beginning ending inventory

    of raw material (14,544)

    (36,360 * 40%)

    Raw material purchase 42,056 pounds
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