Fuson Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Credit sales are collected:
30% in the month of the sale
70% in the following month
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 10% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs.
If 40,380 pounds of raw materials are required for production in December, then the budgeted raw material purchases for November is closest to:

Question

Fuson Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:   Credit sales are collected:
30% in the month of the sale
70% in the following month
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 10% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs.
If 40,380 pounds of raw materials are required for production in December, then the budgeted raw material purchases for November is closest to:

Quizplus · Accepted Answer

The budgeted required production for November is computed as follows:
 11eacbfc_c5f1_3d74_8ffe_fdde1c6008e1_TB7552_00 *December sales of 13,700 units × 10% = 1,370 units
**November sales of 10,100 units × 10%= 1,010 units
The budgeted raw material purchases for November are computed as follows:
 11eacbfc_c5f1_3d75_8ffe_21ff02af5adc_TB7552_00 *40,380 pounds × 10% = 4,038 pounds.
**31,380 pounds × 10% = 3,138 pounds.

Fuson Corporation Makes One Product and Has Provided the Following