The Molson Company had budgeted production for the year as follows: Quarter 1 2 3 4 Production in units 10,000 12,000 16,000 14,000 Four pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,000 lbs. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in materials. Budgeted purchases of raw materials in the second quarter would be:

Question

Business

Declan Bryan

22 October, 23:06

The Molson Company had budgeted production for the year as follows: Quarter 1 2 3 4 Production in units 10,000 12,000 16,000 14,000 Four pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,000 lbs. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in materials. Budgeted purchases of raw materials in the second quarter would be:

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Fisher · Answer 1

49,600 pounds

Explanation:

Prepare a Production Budget as Follows:

Q1 Q2 Q3 Q4

Budgeted Production 10,000 12,000 16,000 14,000

Budgeted Materials 40,000 48,000 64,000 56,000

Add Budgeted c/stock 4,800 6,400 5,600

Total Materials 44,800 54,400 69,600

Less Budgeted o/stock (4,000) (4,800) (6,400)

Budgeted Material Purch 40,800 49,600 63,200

Therefore Budgeted purchases of raw materials in the second quarter would be 49,600 pounds.