Sevenbergen Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:
Credit sales are collected:
40% in the month of the sale
60% in the following month
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month's raw materials production needs.
-If 41,920 pounds of raw materials are required for production in September,then the budgeted cost of raw material purchases for August is closest to:

Question

Sevenbergen Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:
   Credit sales are collected:
40% in the month of the sale
60% in the following month
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month's raw materials production needs.
-If 41,920 pounds of raw materials are required for production in September,then the budgeted cost of raw material purchases for August is closest to:

Quizplus · Accepted Answer

The budgeted required production for August is computed as follows:
 11ea7761_17b6_089b_81a5_9335f602bb22_TB2580_00 *September sales of 10,400 units × 20% = 2,080 units
** August sales of 11,300 units × 20%= 2,260 units
The budgeted raw material purchases for August are computed as follows:
 11ea7761_17b6_2fac_81a5_19de3b0ab597_TB2580_00 * 41,920 pounds × 30% = 12,576 pounds.
** 44,480 pounds × 30% = 13,344 pounds.
The budgeted cost of raw material purchases for August is computed as follows:
 11ea7761_17b6_2fad_81a5_99d63cdf8157_TB2580_00

Sevenbergen Corporation Makes One Product and Has Provided the Following