The following are budgeted dа ta: January February March Sales in units 15,500 21,000 18,500 Production in units 18,500 19,500 17,400 One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 30% of the following month's production needs. Purchases of raw materials for February would be budgeted to be:

Question

Business

Cade Terrell

19 January, 06:01

The following are budgeted dа ta: January February March Sales in units 15,500 21,000 18,500 Production in units 18,500 19,500 17,400 One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 30% of the following month's production needs. Purchases of raw materials for February would be budgeted to be:

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Zechariah Beard · Answer 1

Answer: Purchases of raw materials for February would be budgeted to be 18870 Pound.

Explanation:

Given that,

Sales in January = 15,500 units

Sales in February = 21000 units

Sales in March = 18500 units

Production in units = 18,500 19,500 17,400

Material is required for each finished unit = 1 Pound

Inventory of materials at the end of each month = 30% of the following month's production needs

From the above information,

Total material required for units in February = 19500 * 1 Pound

= 19500 Pound

Desired ending inventory = 30% of 17400 = 5220

Beginning material inventory = 30% of February production units (19500)

= 5850

Purchases of raw materials for February would be budgeted = Total material required for units in February + Desired ending inventory - Beginning material inventory

= 19500 + 5220 - 5850

= 18870 Pound