Hippie Co.’s production budget calls for the following number of units to be pro

Question

Hippie Co.’s production budget calls for the following number of units to be produced for the first quarter of 20x6:

January

17921 units

February

9249 units

March

? units

Each unit requires 4 kilograms of direct material. Hippie Co.’s policy is to begin each month with an inventory of direct materials equal to 46% of the month’s direct material requirements.

The company’s budgeted direct material purchases for February 20x6 is 64391 kilograms. How many units are budgeted to be produced in March?

Select one:

a. 32810

b. 24138

c. 44413

d. 11103

January

17921 units

February

9249 units

March

? units

Explanation / Answer

Direct Material required for February production = 9249 units x 4 = 36,996 kg
Direct Material purchased in January for February production = 36,996 kg x 46% = 17,018 kg
Material need to be purchased for February production in February = 19,978 kg

Total direct material purchases for February =  64,391 kg
Direct material purchases for March production in February =  64,391 kg - 19,978 kg = 44,413 kg

Units budgeted to be produced in March = (44,413 kg / 4kg) / 46% = 24,138 units

Option b. 24,138 is correct answer.

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.