Answered

The tobler company has budgeted production for next year by quarter as follow:

Quarter first second third fourth
Units 10,000 12,000 16,000 14,000
Four pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,000pounds. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs. Budgeted purchases of raw materials in the third quarter would be :

(A) 63,200 pounds
(B) 62,400 pounds
(C) 56,800 pounds
(D) 50,400 pounds

Answer :

Answer:

Purchases of Raw Material = 63200 Pounds

so correct option is (A) 63,200 pounds

Explanation:

solution

first we find Raw material that is required for production for 3rd quarter             so

Raw Material Required for production = Production in units × Raw material per unit required   ..........................1

put here value

Raw Material Required for production =  16000 × 4

Raw Material Required for production = 64000        

and

now Beginning Inventory of Raw material for 3rd quarter          so we know that Ending inventory of 2nd quarter become beginning inventory of 3rd quarter so

Ending Inventory of 2nd quarter = 3rd Quarter Production × 10%

Ending Inventory of 2nd quarter = ( 16000 × 4 ) × 10%    

Ending Inventory of 2nd quarter = 6,400

so now we get Ending Inventory of 3rd Quarter               Ending Inventory of 3rd quarter = 4th Quarter Production × 10%

Ending Inventory of 3rd quarter =  ( 14000 × 4 ) × 10%

Ending Inventory of 3rd quarter = 5,600

so here we get Purchases of Raw Material that is

Purchases of Raw Material =  Raw Material Required for production + Ending Inventory of 3rd quarter - Beginning Inventory of 3rd quarter   .........2

put here value

Purchases of Raw Material = 64000 + 5600 - 6400

Purchases of Raw Material = 63200 Pounds

so correct option is (A) 63,200 pounds

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