The following budgeted information is provided:
$$\begin{array} { | l | l | l | l | }
\hline \text { Month } & 1 & 2 & 3 \
\hline \text { Sales in units } & 15,000 & 20,000 & 18,000 \
\hline \text { Production in units } & 16,000 & 22,000 & 15,000 \
\hline
\end{array}$$
One pound of materials is required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. At the beginning of Month 1, there were 3,200 lbs. of materials on hand. Purchases of raw materials for Month 1 would be (in pounds):

Question

The following budgeted information is provided:
$$\begin{array} { | l | l | l | l | } 
\hline \text { Month } & 1 & 2 & 3 \
\hline \text { Sales in units } & 15,000 & 20,000 & 18,000 \
\hline \text { Production in units } & 16,000 & 22,000 & 15,000 \
\hline
\end{array}$$
One pound of materials is required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. At the beginning of Month 1, there were 3,200 lbs. of materials on hand. Purchases of raw materials for Month 1 would be (in pounds):

Quizplus · Accepted Answer

The production for Month 1 is 16,000 units, requiring 16,000 lbs of materials. The ending inventory for Month 1 should be 20% of Month 2's production needs, which is 20% of 22,000 = 4,400 lbs. Therefore, the total materials needed for Month 1 is 16,000 + 4,400 = 20,400 lbs. With a beginning inventory of 3,200 lbs, the purchases needed are 20,400 - 3,200 = 17,200 lbs.

The Following Budgeted Information Is Provided One Pound of Materials Is Required for Each Finished Unit