Question

Exercise 170 Pitt Corp. makes and sells a single product, widgets. Two pounds of sand are needed to make one widget. Budgeted production of widgets for the next two months follows: September 25,000 units October 1,000 units The company wants to maintain monthly ending inventories of sand equal to 20% of the following month's production needs. On August 31, 10,000 pounds of sand were on hand. How much sand should be purchased in September? Sand should be purchased Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answer

--Correct Answer = 52,400 pounds

A = 25000 units x 2 pounds	Budgeted requirement for September production	50,000	pounds
B = 31000 units x 2 pounds x 20%	Desired ending Inventory of sand for September	12,400	pounds
C	Beginning Inventory of sand	10,000	pounds
D = A+B - C	Sand that should be purchased in September	52,400	pounds = Answer