Question

The following are budgeted data January February March 15,300 20,600 18,300 18,300 19,300 17,200 Sales in units Production in units One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's producttion needs Purchases of raw materials for February would be budgeted to be Multiple Choice 1880 pounds 720 pounds 420 pounds 0 nd

Answer 1

The correct answer is 18,880.

Supporting calculations:

	January	February	March
Production in units	18,300	19,300	17,200
Materials required in Pounds (1 units = 1 pound)	18,300	19,300	17,200
Add: Ending materials (19,300*20/100); (17,200*20/100)	3,860	3,440
Less: Beginning Inventory in pounds (last months ending will be beginning in current month)		3,860
Purchases in pounds for February		18,880

Therefore, purchases for February is 18,880 pounds.