Fuson 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:
30% in the month of the sale
70% 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 10% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs.
-If 40,380 pounds of raw materials are required for production in December,then the budgeted raw material purchases for November is closest to:

Question

Fuson 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:
30% in the month of the sale
70% 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 10% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs.
-If 40,380 pounds of raw materials are required for production in December,then the budgeted raw material purchases for November is closest to:

Quizplus · Accepted Answer

The budgeted required production for November is computed as follows:
 11ea7761_17bb_5fee_81a5_25e99a38539e_TB2580_00 *December sales of 13,700 units × 10% = 1,370 units
** November sales of 10,100 units × 10%= 1,010 units
The budgeted raw material purchases for November are computed as follows:
 11ea7761_17bb_5fef_81a5_09c41936f97f_TB2580_00 * 40,380 pounds × 10% = 4,038 pounds.
** 31,380 pounds × 10% = 3,138 pounds.

Fuson Corporation Makes One Product and Has Provided the Following