Hello and good afternoon this is a repeat question that I asked a few days ago.

Question

Hello and good afternoon this is a repeat question that I asked a few days ago. Please can someone brake down the answer step by step

Trendsetters, Inc. has actual sales for July and August and forecasted sales for September, October, November, and December as follows: Actual July 5.900 units August 6,200 units September 6,000 units October 6,800 units November 5,600 units December 6,100 units a The firm's policy is to have finished goods inventory on hand at the end of the month that is equal to 70% of the nest month's sales it is currently estimated that there will be 2,800 units on hand at the end of August. Calculate the number of units to be produced in each of the months of September, October, and November. B Each unit of finished goods product require 6.5 pounds of raw material. The firm's policy is to have raw material inventory on hand at the end of the month that equal to 60% of the next month's estimated usage. It is currently estimated that 26,000 pounds of raw material will be on hand at the end of August. Calculate the number of pounds of raw material to be purchased in each of the months of September and October.

Explanation / Answer

a. production budget.

company policy to keep 70% of next month sale in stock

Month Sale Stock required Production required (closing stock+sale-opening)

July 5900   

August 6200 2800   

Sep 6000 4760 4760+6000-2800= 7960   

Oct 6800 5920 5920+6800-4760= 7960

Nov 5600 4270 4270+5600-5920= 3950

Dec 6100 0+6100-4270= 1830

B. Raw material purchase budget(6.5 pound per unit)

Month Produntion Budget Closing raw material Purchase in pound

August (opening) 26000

sep 7960 .6*7960*6.5= 31044 31044+(7960*6.5)-26000= 56784

oct 7960 .6*3950*6.5= 15405 15405+(7960*6.5)-56784= 10361

nov 3950 .6*1830*6.5= 7137 7137+(3950*6.5)-10361= 22451

dec 1830 0 0+(1830*6.5)-22451= 0

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