16.
Marst Corporation's budgeted production in units and budgeted
raw materials purchases over the next three months are given
below:
January | February | March | |
Budgeted production (in units) | 66,000 | ? | 80,000 |
Budgeted raw materials purchases (in pounds) | 145,200 | 171,200 | 227,200 |
Two pounds of raw materials are required to produce one unit of
product. The company wants raw materials on hand at the end of each
month equal to 30% of the following month's production needs. The
company is expected to have 28,000 pounds of raw materials on hand
on January 1. Budgeted production for February should be:
rev: 10_27_2016_QC_CS-67319
123,200 units
48,000 units
88,000 units
96,000 units
1 | February |
Required production in units | A |
Raw materials required per unit | 2 |
Raw materials needed to meet the production | 2A |
Add desired ending raw
materials inventory (80,000 units × 2 pounds per unit × 30%) |
48000 |
Total raw materials needs | 48,000 + 2A |
Less beginning raw materials
inventory (A units × 2 pounds per unit × 30%) |
0.6A |
Raw materials to be purchased | 171,200 |
171,200 = 48000+2A - 0.6A | |
1.4A = 123200 | |
A = 88000 | |
Ans: C 88000 |
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