Production estimates for August are as follows: Estimated inventory (units), Aug

Question

Production estimates for August are as follows:

Estimated inventory (units), August 1 12,000
Desired inventory (units), August 31 9,000
Expected Sales volume (units), August 75,000

For each unit produced, the direct materials requirement are as follows:

Direct Material A ($5 per lb) 3 lbs
Direct Material B ($18 per lb) 1/2 lb

The number of pounds of matierials A and B required for August production are? The total direct materials purchases (assuming no beginning or ending inventory of material) of materials A and B required for August production are?

Explanation / Answer

Production will be 75 -(12-9)= 72,000 A 72,000*3= 216,000 lbs 216,000* 5 = 1,080,000 18*1/2* 72,000= 648,000 Total purchases $1,728,000

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