Masterson Company's budgeted production calls for 56,000 units in April and 52,000 units in May of a key raw material that costs $1.85 per unit.Each month's ending raw materials inventory should equal 30% of the following month's budgeted materials.The April 1 inventory for this material is 16,800 units.What is the budgeted materials purchases for April?

Question

Quizplus · Accepted Answer

To calculate the budgeted materials purchases for April, we first determine the desired ending inventory for April, which should equal 30% of May's budgeted materials (52,000 units). So, the desired ending inventory for April is 30% of 52,000 = 15,600 units. Next, we calculate the total materials needed for April, which includes the production needs plus the desired ending inventory, minus the beginning inventory. The production needs for April are 56,000 units, so the total materials needed are 56,000 (for production) + 15,600 (desired ending inventory) - 16,800 (beginning inventory) = 54,800 units.Finally, to find the budgeted materials purchases for April, we multiply the total materials needed by the cost per unit: 54,800 units * $1.85 = $101,380.

Masterson Company's Budgeted Production Calls for 56,000 Units in April