Question

In: Accounting

• It is now the beginning of January • Sales are forecast at 100,000 units for...

• It is now the beginning of January • Sales are forecast at 100,000 units for January, 130,000 units for February, and 150,000 units for March. • Ending inventory of finished product should be 20% of next month’s sales. • Each unit of finished product requires 0.5 lb. of materials. • Ending inventory of materials should be 10% of next month’s production needs. • Beginning inventory of finished product is 22,000 units. • Beginning inventory of materials is 5,500 lbs.

12. What is forecasted production for January?

a.               104,000 units

b.               96,000 units

c.               106,500 units

d.               102,500 units

13. If the forecasted production for February is 134,000 units. What amount of materials should be purchased in January?

a.               52,000 lbs.

*b.             53,200 lbs.

c.               54,500 lbs.

d.               51,600 lbs.

Solutions

Expert Solution

Question 12.
Answer: a.104,000 units
Explanation:
Sales in January 100000 Units
Less: Begining Inventory 22000 Units
Required production for January sales 78000 Units
Add: Required ending inventory (130000*20%) 26000 Units
Forecasted production for January 104000 Units
Question 13
Answer: b.53,200 lbs
Explanation:
Forecasted production for January 104000 units
Raw materials required (104,000*0.5lb per unit0 52000 lbs
Less: Begining inventory of materials 5500 lbs
Required materials for January Production 46500 lbs
Add: ending inventory of materials (134000*0.5*10%) 6700 lbs
Materials to be purchased in January 53200 lbs

ekkarill92 answered 2 years ago
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