Question

Marst Corporation's budgeted production in units and budgeted raw materials purchases over the next three months...

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) 70,600 ? 83,000
Budgeted raw materials purchases (in pounds) 144,810 160,600 161,800

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 20% of the following month's production needs. The company is expected to have 28,240 pounds of raw materials on hand on January 1. Budgeted production for February should be:

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Answer #1

Answer = 79625

Explanation:

Raw material consumed = op. Raw material + raw material purchased - cl. Raw material

In january=

Raw material consumed = 70600×2 = 141200

141200 = 28240 + 144810 - closing raw material

Therefore closing raw material = 31850

Units that can be produced from cl. Raw material = 31850/2 = 15925 units which should be 20% of the next month production

The company wants raw materials on hand at the end of each month equal to 20% of the following month's production needs

Therefore total production for february will be 15925/20% = 79625 units

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