Prester Corporation has budgeted production for the next year as follows: Quarte

Question

Prester Corporation has budgeted production for the next year as follows: Quarter 1st 2nd 3rd 4th 60,000 70,000 80,000 90,000 Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarters production needs for material A. A total of 30,000 pounds of material are on hand to start the year. Budgeted purchases of material A for the second quarter would be: A. 140,000 POUNDS B. 180,000 POUNDS C. 135,000 POUNDS D. 145,000 POUNDS

Explanation / Answer

Answer D   145,000 pounds

budgeted purchase 70,000 Add: ending 25% of 80,000 20,000 total need 90,000 less :opening 70,000 @25% 17,500 total purchase 72,500 material reuqired for each unit @2 total 145,000

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