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 in pounds for October?

Question

Quizplus · Accepted Answer

To calculate the budgeted materials purchases in pounds for October, we need to consider the following:
- October's production requires 5,000 units, which means a total of 5,000 x 8 = 40,000 lbs. of raw material A.
- November's budgeted materials requirements are 8,000 x 8 = 64,000 lbs. of raw material A.
- October's ending inventory of raw material A should be 20% of November's budgeted materials requirements, which is 0.2 x 64,000 = 12,800 lbs.
- Therefore, the total materials needed for October are 40,000 + 12,800 = 52,800 lbs.
- Since the October 1 inventory for this material is 8,000 lbs., the budgeted materials purchases in pounds for October will be 52,800 - 8,000 = 44,800 lbs. (Option B).

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