Question

In: Accounting

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 3 years ago
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