Zhang Industries budgets production of 300 units in June and 310 units in July.Each finished unit requires 4 pounds of raw material K,which costs $5 per pound.Each month's ending inventory of raw materials should be 30% of the following month's budgeted production.The June 1 raw materials inventory has 360 pounds of raw material K.Compute budgeted purchases for raw material K for June.
A)1,200 lbs.
B)1,240 lbs.
C)1,212 lbs.
D)1,220 lbs.
E)880 lbs.

Question

Quizplus · Accepted Answer

The correct answer is C.The budgeted purchases for raw material K for June can be computed as follows:Budgeted purchases = (Budgeted production for July x Raw material K per unit) + (Ending inventory for June x 30%) - (Beginning inventory for June)= (310 units x 4 pounds per unit) + (310 units x 4 pounds per unit x 30%) - (360 pounds)= 1,240 pounds + 372 pounds - 360 pounds= 1,212 pounds

Zhang Industries Budgets Production of 300 Units in June and 310