Production estimates for August for Jay Company are as follows: Estimated inventory (units), August 1 12,000...

Production estimates for August for Jay Company are as follows:

Estimated inventory (units), August 1	12,000
Desired inventory (units), August 31	9,000
Expected sales volume (units), August	75,000

For each unit produced, the direct materials requirements are as follows:

Material A ($5 per lb.)	3.0 lbs.
Material B ($18 per lb.)	0.5 lb.

The number of pounds of Materials A and B required for August production is

a.216,000 lbs. of A; 36,000 lbs. of B

b.216,000 lbs. of A; 72,000 lbs. of B

c.234,000 lbs. of A; 39,000 lbs. of B

d.225,000 lbs. of A; 37,500 lbs. of B

Solutions

Expert Solution

	Correct option is: a. 216,000 lbs of A ; 36,000 lbs of B

	Workings:
			August
	Budgeted Sales in units	=	75000
Add:	Desired ending Inventory	=	9,000
	Total Production required	=	84,000
Less:	Beginning Inventory	=	12,000
	Units to be produced	=	72,000
	Material A (72000 X 3 lbs)	=	2,16,000
	Material B (72000 X 0.5 lbs)	=	36,000

ekkarill92 answered 1 year ago

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