Alliance Company budgets production of 24,000 units in January and 28,000 units in the February.Each finished unit requires 4 pounds of raw material K that costs $2.50 per pound.Each month's ending raw materials inventory should equal 40% of the following month's budgeted materials.The January 1 inventory for this material is 38,400 pounds.What is the budgeted materials needed in pounds for January?
A)102,400 pounds.
B)96,000 pounds.
C)57,600 pounds.
D)140,800 pounds.
E)83,200 pounds.

Question

Quizplus · Accepted Answer

The budgeted materials needed for January is calculated as follows:  - January production requires: 24,000 units * 4 pounds = 96,000 pounds.  - February production requires: 28,000 units * 4 pounds = 112,000 pounds.  - Ending inventory for January should be 40% of February's requirement: 112,000 * 0.40 = 44,800 pounds.  - Total materials needed for January = January production requirement + January ending inventory - January beginning inventory = 96,000 + 44,800 - 38,400 = 102,400 pounds.

Alliance Company Budgets Production of 24,000 Units in January and 28,000