Question

In: Accounting

Coleman, Inc. anticipates sales of 48,000 units, 46,000 units, 49,000 units and 48,000 units in July,...

Coleman, Inc. anticipates sales of 48,000 units, 46,000 units, 49,000 units and 48,000 units in July, August, September and October, respectively. Company policy is to maintain an ending finished-goods inventory equal to 40% of the following month's sales. On the basis of this information, how many units would the company plan to produce in September?

46,000.

46,800.

47,200.

48,600.

Some other amount.

Tidewater plans to sell 91,000 units of product no. 794 in May, and each of these units requires 3 units of raw material. Pertinent data follow.

	Product No. 794	Raw Material
Actual May 1 inventory	11,600 units	29,600 units
Desired May 31 inventory	17,600 units	20,600 units

On the basis of the information presented, how many units of raw material should Tidewater purchase for use in May production?

246,000.

264,000.

282,000.

300,000.

Some other amount.

An examination of Shorter Corporation's inventory accounts revealed the following information:

Raw materials, June 1: 46,200 units
Raw materials, June 30: 51,200 units
Purchases of raw materials during June: 187,000 units

Shorter's finished product requires four units of raw materials. On the basis of this information, how many finished products were manufactured during June?

45,500.

48,000.

58,300.

71,100.

Some other amount.

Solutions

Expert Solution

Solution 1:

Estimated september production = Estimated sales for september + Desired ending inventory for september - Estimated beginning inventoty

= 49000 + (48000*40%) - (49000*40%) = 48600 units.

Hence last option is correct.

Solution 2:

Direct material purchase budget - May
Particulars	Amount
Estimated sales units	91000
Add: Desired ending inventory	17600
Less: Budgeted beginning inventory	11600

budgeted production units	97000
Raw Material required per unit	3
Estimated raw material requirement	291000
Add: Desired ending inventory of raw material	20600
Less: Budgeted beginning inventory of raw material	29600

Budgeted raw material purchase units	282000

Hence 3rd option is correct.

Solution 3:

Raw material consumed = Beginning inventory + Purchases of raw material - ending inventory of raw material

= 46200 + 187000 - 51200 = 182000 units

Raw material requirement per unit of finished goods = 4 units

Finished products manufactured during June = 182000 / 4 = 45500 units

Hence first option is correct.

ekkarill92 answered 1 year ago

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