Victoria Corporation manufactures quality vases. Budgeted sales and production data for the vases are as follows: The ending inventory for each month should be equal to 20% of the next month's production needs. Each vase requires one pound of clay in its manufacture. Victoria Corporation has a policy that the inventory of clay at the end of each month needs to be equal to 20% of the production needs for the following month. At the beginning of January, 480 pounds of clay were in inventory. How many pounds of clay would Victoria Corporation need to purchase in February?

Question

Victoria Corporation manufactures quality vases. Budgeted sales and production data for the vases are as follows:  The ending inventory for each month should be equal to 20% of the next month's production needs. Each vase requires one pound of clay in its manufacture. Victoria Corporation has a policy that the inventory of clay at the end of each month needs to be equal to 20% of the production needs for the following month. At the beginning of January, 480 pounds of clay were in inventory. How many pounds of clay would Victoria Corporation need to purchase in February?

Quizplus · Accepted Answer

First, we need to determine the production needs for February. According to the information given, the ending inventory for February should be 20% of March's production needs, which means March's production needs will be:

11,000 x 1.2 = 13,200 vases

Therefore, February's production needs will be:

13,200 x 0.2 = 2,640 vases

Since each vase requires one pound of clay, February's clay needs will be:

2,640 x 1 = 2,640 pounds

However, we need to add the desired ending inventory of clay for February, which is 20% of March's production needs:

13,200 x 0.2 = 2,640 pounds

So the total clay needs for February are:

2,640 + 2,640 = 5,280 pounds

Finally, we need to subtract the 480 pounds of clay already in inventory at the beginning of January:

5,280 - 480 = 2,800 pounds

Therefore, Victoria Corporation would need to purchase 2,800 pounds of clay in February. However, none of the answer choices match exactly, so we need to calculate the closest option. The closest option is D: 2,840 pounds of clay.

Victoria Corporation Manufactures Quality Vases