The Tobler Company has budgeted production for next year as follows:

Four kilograms of raw materials are required for each unit produced.At the start of the year,raw materials on hand total 4,000 kilograms.The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs.What would be the budgeted purchases of raw materials in the third quarter?

Question

The Tobler Company has budgeted production for next year as follows:

Four kilograms of raw materials are required for each unit produced.At the start of the year,raw materials on hand total 4,000 kilograms.The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs.What would be the budgeted purchases of raw materials in the third quarter?

Quizplus · Accepted Answer

To determine the budgeted purchases of raw materials in the third quarter, we need to calculate the total production needs for the third quarter and multiply it by 4 (since four kilograms of raw materials are required for each unit produced).

Production needs for the third quarter:
(40,000 + 48,000 + 56,000) x 0.10 = 14,400 kilograms

Total raw materials needed for the third quarter:
56,000 + 14,400 = 70,400 kilograms

Budgeted purchases of raw materials in the third quarter:
70,400 x 4 = 281,600 kilograms

So the answer is D) 63,200 kilograms.

The Tobler Company Has Budgeted Production for Next Year as Follows