cahulla corporation 3 pts Cahuilla Corporation predicts the following sales in u

Question

cahulla corporation 3 pts Cahuilla Corporation predicts the following sales in units for the coming four months: April May June July Sales in Units 280 Each month's ending Finished Goods inventory should be 40% of the next month's sales March 31 Finished Goods inventory is 96 units. A finished unit requires five pounds of direct material B. The March 31 Raw Materials inventory has 200 pounds of B. Each month's ending Raw Materials inventory should be 30% of the following month's production needs. The budgeted purchases of pounds of direct material B during May should be: 276 lbs. O 1,854 lbs. 1,008 lbs. 288 lbs 1,422 lbs. Next 4 Previous Stop sharing Hide

Explanation / Answer

Production during May = May sales in units + 40% of June sales in units - 40% of May sales in units

= 280 + (300*40%) - (280*40%)

= 280 + 120 - 112

= 288

Production during June = June sales in units + 40% of July sales in units - 40% of June sales in units

= 300 + (240*40%) - (300*40%)

= 300 + 96 - 120

= 276

Raw materials required in May = 288 units * 5 pounds per unit = 1,440

Raw materials required in June = 276 units * 5 pounds per unit = 1,380

Budgeted purchases of pounds of direct material B during May = Raw materials required in May + 30% of raw materials required in June - 30% of raw materials required in May

= 1,440 + (1,380*30%) - (1,440*30%)

= 1,440 + 414 - 432

= 1,422 lbs

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