Teton Trails manufactures backpacks for adventurers. The backpacks come in two types: Daytripper, and Excursion. Teton anticipates the following production volumes:
Daytripper: 2,000 backpacks in July, 2,200 backpacks in August
Excursion: 1,200 backpacks in July, 900 backpacks in August
Each Daytripper backpack requires 1 yard of 800 denier polyester fabric and each Excursion backpack requires 2 yards of 1200 denier polyester fabric. Teton's policy is to maintain ending inventories of each type of fabric at 10% of expected production needs for the next month.
What is the budgeted level of material purchases in July for both types?

Question

Quizplus · Accepted Answer

Beginning Inventories:
Daytripper: 2,000 units x 1 yard/unit x 10% = 200 yards
Excursion: 1,200 units x 2 yards/unit x 10% = 240 yards
Ending Inventories:
Daytripper: 2,200 units x 1 yard/unit x 10% = 220 yards
Excursion: 900 units x 2 yards/unit x 10% = 180 yards
Budgeted purchases: Ending + Current Production - Beginning
Daytripper: 220 + (2,000 x 1) - 200 = 2,020 yards
Excursion: 180 + (1,200 x 2) - 240 = 2,340 yards

Teton Trails Manufactures Backpacks for Adventurers