Gerald Company manufactures books.Manufacturing a book takes 10 units of A1 and 1 unit of A2.Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively.Beginning inventory is 4,000 units of A1 and 30 units of A2.The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months.
-How many units of A2 are expected in the raw material inventory at the end of the second month?

Question

Gerald Company manufactures books.Manufacturing a book takes 10 units of A1 and 1 unit of A2.Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively.Beginning inventory is 4,000 units of A1 and 30 units of A2.The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months. 
-How many units of A2 are expected in the raw material inventory at the end of the second month?

Quizplus · Accepted Answer

To determine how much A1 and A2 are needed for the two months combined, we can calculate:

(1,000 books x 10 units A1) + (1,200 books x 10 units A1) = 22,000 units A1
(1,000 books x 1 unit A2) + (1,200 books x 1 unit A2) = 2,200 units A2

Adding the beginning inventory to the raw materials required, we get:

A1: 4,000 units + 22,000 units = 26,000 units
A2: 30 units + 2,200 units = 2,230 units

To calculate the ending inventory for each material for each month, we can use the formula:

Ending Inventory = Beginning Inventory + Raw Materials - Materials Used

For A1, the ending inventory will be:

Month 1: 4,000 units + 22,000 units - (1,000 books x 10 units A1) + 500 units decrease = 25,500 units
Month 2: 25,500 units + 22,000 units - (1,200 books x 10 units A1) + 500 units decrease = 26,800 units

For A2, the ending inventory will be:

Month 1: 30 units + 2,200 units - (1,000 books x 1 unit A2) + 5 units increase = 2,235 units
Month 2: 2,235 units + 2,200 units - (1,200 books x 1 unit A2) + 5 units increase = 2,240 units

Therefore, the expected units of A2 in the raw material inventory at the end of the second month is 40 units (Option C).

Gerald Company Manufactures Books