Question

Assume a company’s sales budget for April and May is 47,000 units and 49,000 units, respectively. Its production budget for the same two months is 44,000 units and 45,000 units, respectively. Each unit of finished goods required 3 pounds of raw materials. The company always maintains raw materials inventory equal to 30% of the following months production needs.

Also assume the company pays $2.80 per pound of raw material. It always pays for 50% of its raw material purchases in the month of purchase and the remainder in the following month. The accounts payable balance on March 31^st is $147,000. What would be the accounts payable balance at the end of April?

Answer 1