Question

Holt Company manufactures boxes. To manufacture a box, it takes 22 units of wood and 1 units of plastic. Scheduled production of boxes for the next two months is 1,000 and 1,500 boxes, respectively. Beginning inventory is 8,000 units of wood and 60 units of plastic. The ending inventory of wood is planned to decrease 2,000 units each for the next two months, and the plastic inventory is expected to increase 10 units each of the next two months. Based on this information, the number of units of wood that Holt needs to purchase during the first month is: A. 8,000 units B. 20,000 units C. 28,000 units D. 30,000 units

Answer 1

Ans:   B. 20,000 units

The number of units of wood that Holt needs to purchase during the first month

• purchases= Closeing inventory + Consumption - opening inventory
• ​ Consumption=Production*number of units required for one finished unit
• Scheduled production of boxes for the next two months is 1,000 and 1,500 boxes

	1 st month	2nd month
Production units	1,000	1,500
Wood units required per Box	22	22
consumption	22,000	33,000
+ Ending inventory	6,000	4,000
- Beginning inventory	(8,000)	(6,000)
purchases	20,000	31,000