Question

The following are budgeted data:

	January			February		March
Sales in units	15,500			21,000		18,500
Production in units	18,500			19,500		17,400

One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 30% of the following month's production needs. Purchases of raw materials for February would be budgeted to be:

Multiple Choice

• 19,970 pounds

• 18,630 pounds

• 18,870 pounds

• 20,130 pounds

Answer 1

18,870 pounds
	January	February	March
Budgeted units to be Produced	18,500	19,500	17,400
Materials required per unit	1	1	1
Material units required for production	18,500	19,500	17,400
Plus: desired budgeted ending inventory	5,850	5,220	-
Total material units reuired	24,350	24,720	17,400
Less: Beginning Inventory		5,850
Material units to be purchased		18,870