ABC Company’s budgeted sales for June, July, and August are 12,000, 16,000, and
ID: 2597345 • Letter: A
Question
ABC Company’s budgeted sales for June, July, and August are 12,000, 16,000, and 14,000 units, respectively. ABC requires 30% of the next month’s budgeted unit sales as finished goods inventory each month. Budgeted ending finished goods inventory for May is 3,600 units. Each unit that ABC Company produces uses 3 pounds of raw material. ABC requires 25% of the next month’s budgeted production as raw material inventory each month. Calculate the number of pounds of raw material to be purchased in June
Explanation / Answer
Purchase Budget June July August Expected sale unit 12,000 16,000 14,000 Add:ending inventory 4800 4200 total needs 16,800 20,200 less beginning inventory -3,600 -4,800 purchase required 13,200 15,400 Raw Materials Budget June July purchase required 13,200 15,400 pounds per unit required 3 3 Total pounds required 39600 46200 Add:Ending inventory 11550 total needs 51150 less:beginning inventory -9900 Materials required 41250 answer 41,250 units required