Bentsen Corporation makes one product. The ending finished goods inventory equals 40% of the following month's sales.The ending raw materials inventory equals 10% of the following month's raw materials production needs.Each unit of finished goods requires 6 pounds of raw materials.The raw materials cost $2.00 per pound.If 76,680 pounds of raw materials are required for production in September, then the budgeted cost of raw material purchases for August is closest to:

Question

Bentsen Corporation makes one product.  The ending finished goods inventory equals 40% of the following month's  sales.The ending raw materials inventory equals 10% of the following month's raw materials production needs.Each unit of finished goods requires 6 pounds of raw materials.The raw materials cost $2.00 per pound.If 76,680 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: 11ea7998_5d6f_81f3_911b_6f7e77ac443f_TB2627_00_TB2627_00 *September sales of 13,900 units × 40% = 5,560 units
** August sales of 9,000 units × 40%= 3,600 units
The budgeted raw material purchases for August are computed as follows: 11ea7998_5d6f_a904_911b_f5c079386aa8_TB2627_00_TB2627_00 * 76,680 pounds × 10% = 7,668 pounds.
** 65,760 pounds × 10% = 6,576 pounds.
The budgeted cost of raw material purchases for August is computed as follows: 11ea7998_5d6f_a905_911b_89d696f61ddd_TB2627_00_TB2627_00

Bentsen Corporation Makes One Product