Boulware Company's budgeted production calls for 5,000 units in October and 8,000 units in November. Each unit requires 8 pounds (lbs.) of raw material A. Each month's ending inventory of raw materials should equal 20% of the following month's budgeted materials requirements. The October 1 inventory for this material is 8,000 pounds. What is the budgeted materials purchases for this key material in pounds for October?

Question

Quizplus · Accepted Answer

To determine the budgeted materials purchases for October, we need to calculate the total materials required for October and subtract any materials that are already in inventory on October 1st.

Total materials required for October = 5,000 units x 8 lbs. per unit = 40,000 lbs.
Ending inventory for October = 20% of November's requirements = 20% of (8,000 x 8) = 12,800 lbs.

Therefore, the materials required for purchase in October = 40,000 - 8,000 + 12,800 = 44,800 lbs.

Option D is the correct answer.

Boulware Company's Budgeted Production Calls for 5,000 Units in October