Answered

The following are budgeted data:
Month Sales (units) Production (units)
April 15,000 18,000
May 20,000 19,000
June 18,000 16,000
Two pounds of material are required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. Purchases of raw materials for May should be _____ (A) 36,800 pounds(B) 39,200 pounds(C) 52,000 pounds(D) 38,000 pounds

Answer :

Answer:

final purchase cost of raw materials for May = 36800 lbs

Explanation:

total production in may = 19000 units

2 pound of raw material required for each unit

Raw Material used in May should be = 19000*2 pounds =  38000 pounds

Closing balance of Material required  =(16000*2)*0.20 = +6400

Opening balance of Material available i.e April's closing balance of Material (19000*2)*20% =  7600

final purchase cost of raw materials for May = 38000+6400-7600 = 36800 pounds

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