Question

Merriweather Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other institutions. The table tops are manufactured by Merriweather, but the table legs are purchased from an outside supplier. The Assembly Department takes a manufactured table top and attaches the four purchased table legs. It takes 20 minutes of labor to assemble a table. The company follows a policy of producing enough tables to ensure that 30% of next month's sales are in the finished goods inventory. Merriweather also purchases sufficient raw materials (legs) to ensure that raw materials (legs) inventory is 70% of the following month's scheduled production needs. Merriweather's sales budget in units for the next quarter is as follows: (CMA adapted)
  

July	3,000
August	3,200
September	2,800

  
Merriweather's ending inventories in units for June 30 are:
  

Finished goods	2,600
Raw materials (legs)	4,700

Assume the required production for August and September is 2,300 units and 2,500 units, respectively, and the July 31 raw materials (legs) inventory is 4,900 units. The number of table legs to be purchased in August is:

Answer 1

Purchase Budget
August production	2,300
x table legs per Tables	4
Total Production need	9,200
Add: Desired Ending Inventory	7,000
( 2,500 x 4 x 70% )
Less: Beginning Inventory	-4,900
Number of table legs to be purchased in August	11,300