BoomBoom Company produces speaker systems for trucks. BoomBoom expects to sell 20,000 units in January, 25,000 units in February, and 22,000 units in March. Each unit is priced at $45. BoomBoom's desired ending inventory is 25% of the following month's sales. That requirement was met on January 1.
Each speaker system requires two boxes and 10 metres of wire. Boxes cost $5 each, and wire is $0.90 per metre. BoomBoom's desired ending raw materials inventory is 30% of the following month's production needs. On January 1, BooBoom had 9,000 boxes and 100,000 metres of wire in inventory.
-Refer to the Figure.How many boxes does BoomBoom expect to purchase in January?

Question

Quizplus · Accepted Answer

To calculate the number of boxes to purchase in January, we first need to calculate the total number of boxes needed for January's production:
20,000 speaker systems x 2 boxes per system = 40,000 boxes
Next, we need to subtract the boxes in ending inventory (25% of February's sales):
25% x 25,000 speaker systems = 6,250 speaker systems
6,250 speaker systems x 2 boxes per system = 12,500 boxes
40,000 total boxes needed - 12,500 boxes in ending inventory = 27,500 boxes to purchase in January
Therefore, the correct answer is (C) 48,050 because 27,500 boxes needed to purchase in January+ 9,000 boxes in beginning inventory= 36,500 boxes needed to purchase for January.

BoomBoom Company Produces Speaker Systems for Trucks