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In: Accounting

A manufacturing business makes and sells widgets. Each widget requires two units of raw materials, which...

  1. A manufacturing business makes and sells widgets. Each widget requires two units of raw materials, which cost $3 each. Production and sales quantities of widgets each month are as follows:

Month

Sales and production units

December (actual)

50,000

January (budget)

55,000

February (budget)

60,000

March (budget)

65,000

In the past, the business has maintained its inventories of raw materials at 100,000 units. However, it plans to increase raw material inventories to 110,000 units at the end of January and 120,000 units at the end of February. The business takes one month’s credit from its suppliers.

Required:

Calculate the forecast payments to suppliers each month, for raw material purchases.

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Expert Solution

ekkarill92 answered 2 years ago
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