Question

A company has prepared a production budget for the upcoming quarter as follows: April May June...

A company has prepared a production budget for the upcoming quarter as follows:

April May June
Finished Units 15,295 15,182 15,993

3 pounds of raw material are required to make 1 finished unit. The company desires an ending raw materials inventory for each month equal to 26% of the following months production (in units of raw material) . How many pounds of raw material should be purchased in May?

Round your answer to the nearest whole number. Don't round any intermediate calculations.

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Answer #1

Ans:

1 Unit required 3 Pounds of Raw Material.

April Raw Material at the end of month : 26% of May Production Units * 3

May Production Units : 15,182

April end raw material : 26%*3*15,182 = 11,841.96 Pounds

May Requirement of Raw Material : 15,182 * 3 : 45,546 Pounds.

June Production Units : 15,993

June Requirement purchased in May : 26% * 15,993 * 3 = 12,474.54 Pounds.

Raw Material purchased in May : 45,546 + 12,474.54 -  11,841.96 = 46,178.58 Pounds

So correct answer is 46178.58 Pounds.

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