Question

Aborkian Co. is forecasting sales of 75,000 units of product for November. To make one unit...

Aborkian Co. is forecasting sales of 75,000 units of product for November. To make one unit of finished product, seven pounds of raw materials are required. Actual beginning and desired ending inventories of raw materials and finished goods are:

November 1 November 30
(Actual) (Desired)
Raw materials (pounds) 91,400 86,400
Finished goods 8,500 9,600


(a.) Calculate the number of units of product to be produced during November.
(b.) Calculate the number of pounds of raw materials to be purchased during November.

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Answer #1

Requirement a

Units to be produced = 76,100

Working

November
Units to be sold 75000
Desired Ending Finished Inventory 9600
Total Units needed 84600
Less : Beginning Finished Inventory 8500
Units to be Produced 76100

Requirement b

Number of pounds of raw materials to be purchased during November.= 527,700

Working

November
Budgeted production (units) 76100
Multiplied by Materials requirements per unit (Pound) 7
Materials needed for production (Pound) 532700
Add: Budgeted ending inventory (Pound) 86400
Total materials requirements (Pound) 619100
Less: Beginning inventory (Pound) 91400
Materials to be purchased (Pound) 527700
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