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In: Accounting

Greener Grass Fertilizer Company plans to sell 220,000 units of finished product in July and anticipates...

Greener Grass Fertilizer Company plans to sell 220,000 units of finished product in July and anticipates a growth rate in sales of 5 percent per month. The desired monthly ending inventory in units of finished product is 75 percent of the next month’s estimated sales. There are 165,000 finished units in inventory on June 30. Each unit of finished product requires 5 pounds of raw material at a cost of $1.65 per pound. There are 770,000 pounds of raw material in inventory on June 30.

Required: Compute the company’s total required production in units of finished product for the entire three-month period ending September 30. (Round all intermediate calculations and your final answer to the nearest unit.)

Independent of your answer to requirement (1), assume the company plans to produce 660,000 units of finished product in the three-month period ending September 30, and to have raw-material inventory on hand at the end of the three-month period equal to 25 percent of the use in that period. Compute the total estimated cost of raw-material purchases for the entire three-month period ending September 30.

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Expert Solution

Required: Compute the company’s total required production in units of finished product for the entire three-month period ending September 30. (Round all intermediate calculations and your final answer to the nearest unit.)

719559 Units

Independent of your answer to requirement (1), assume the company plans to produce 660,000 units of finished product in the three-month period ending September 30, and to have raw-material inventory on hand at the end of the three-month period equal to 25 percent of the use in that period. Compute the total estimated cost of raw-material purchases for the entire three-month period ending September 30.

Total Production 660000
* Raw Material per unit 5
Total Raw Material required for production 3300000
Add: Desired ending inventory of Raw Material 825000
Total Raw material required 4125000
Less: Beginning inventory of raw Material 770000
Raw Material to be purchased 3355000
Cost per unit $1.65
Total Cost of Purchase $5535750

ekkarill92 answered 1 year ago
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