Question

1. (T of F) Purchases of raw materials must be at least large enough to cover production. 2. Albertville Ine produces leather handbags. The production budget for the next four months is as follows: July 5.000 units. August 7,000 units, September 7.500 units, October 8,000 units. Each handbag requires 0.5 square meters of leather. Albertville Ine's leather inventory Ine's leather inventory policy is 30% of next month's production needs. Leather is expected to cost $5.00 per square meter in June, but increases by 30% in July, What is the expected cost of leather purchases in July? A. $14.600. B. $15.800. C. $16,200. D. $16,800. E. $18,200. 3. Which of the following is FALSE? A. Sales does not affect raw materials purchases. B. Finished goods inventory policy is one determinant of raw materials purchases. C. When calculating raw materials purchases, the starting point will be budgeted production. D. Two of the above are FALSE. E. None of the above is FALSE. 4. Jim's Pastries, Inc. manufactures donuts, which require 0.3 pounds of flour per unit. Jim's production budget for the next four months is as follows: July, 5,000 units: August, 7.000 units; September, 8,000 units; and October, 8,000. The raw materials flour ending inventory policy is 25% of the following month's production needs. If August planned purchases are $8,700, then what is the approximate cost per pound of flour for August? A. $7.40. B. $6.50. C. $6.25. D. $6.40 E. None of the above. (Tor F) Changes in the raw materials budget will require changes in the production budget.

please answer asap

Answer 1

А B Ans 1 Reasom TRUE Purchase of Raw material must be least large enough to cover production so as to avoid any kind of idle time in production process due to unavaliability of Raw Materials. And to ensure there is also delay in meeting the production schdule and supply. Ans 2 Option E: $ 18200 Solu: July August Production Units 5,000 7,000 2,500 3,500 Less 750 5 Add Leather Required (Production Units x 0.5) Opening Inventory of Leather (2500x 30%) Closing Inventory of Leather (3500*30%) Purchased Required Cost Per Unit(5 x 1.30) Total Cost of Purchase 1,050 2,800 6.50 18,200

2 A 23 Ans 3 24 Solu D Option A The Sales have a direct implication on production budget and purchase of Raw Material depends upon the production budget. Thus sales determine the production and on the basis of which the Raw material procurement is determined, so sales affect Raw Material purchase. If Sales reduce production will go down so eventually raw material requirement will also go down. Thus the Statement is False. All the other Statement are true. Option E B2 Ans 4 33 Solu: August September 34 Production Units 7,000 8,000 25 2,100 2,400 38 Less 525 39 10 Add Flour Required (Production Units x 0.3) Opening Inventory ofFlour (2100x 25%) Closing Inventory ofFlour (2400*25%) Purchased Required(Pounds) Total Cost of Purchase Cost Per Pound 600 2,175 8,700 4.00 (Given)

17 Ans 5 TRUE 8 19 Reason IF the cost of raw material increases , cost of production will also increase so leading into change in production budget. Similar in case of Decrease of raw material also will change production budget