Coleman, Inc. anticipates sales of 48,000 units, 46,000 units, 49,000 units and
ID: 2516099 • Letter: C
Question
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.
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.
Product No. 794 Raw Material Actual May 1 inventory 11,600 units 29,600 units Desired May 31 inventory 17,600 units 20,600 unitsExplanation / Answer
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:
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.
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