Question

Charm Enterprises’ production budget shows the following units to be produced for the coming three months:

Units to be produced:

April: 3,210 May: 3,530 June: 3,410

A finished unit requires three ounces of a key direct material. The March 31 Raw Materials Inventory has 3,177 ounces (oz.) of the material. Each month’s ending Raw Materials Inventory should be 30% of the following month’s production needs. The materials to be purchased during May should be:

Answer 1

Schedule of Raw material to be purchased in May

		May
(A)	Units to be Produced	3530	Units
(B)	Material Required per Unit	3	Ounces
(C=(A*B))	Total Material Required for Production	10590	Ounces
(D)	Add: Desired Closing Raw material Inventory	3069	Ounces
(E=(C+D))	Raw material Needed	13659	Ounces
(F)	Less: Opening Inventory Available	3177	Ounces
(G=(E-F))	Raw material to be purchased	10482	Ounces

Working Note

		April	May	June
(A)	Units to be Produced	3210	3530	3410
(B)	Material Required per Unit (Ounces)	3	3	3
(C=(A*B))	Total Material Required	9630	10590	10230
(D)	Add: Desired Closing Raw material Inventory	3177*	3069**
(E=(C+D))	Total Raw material Needed	12807	13659
(F)	Less: Opening Inventory Available	3177	3177	3069
(G=(E-F))	Raw material to be purchased	9630	10482

Data for June is Incomplete as no details about ending raw material was given in the question.

*(10590x30%)

**(10230x30%)