Question

Sill Corporation makes one product. Budgeted unit sales for January, February, March, and April are 9,900, 11,400, 11,900, and 13,400 units, respectively. The ending finished goods inventory equals 20% of the following month's sales. The ending raw materials inventory equals 40% of the following month’s raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. If 61,000 pounds of raw materials are required for production in March, then the budgeted raw material purchases for February is closest to:

Multiple Choice

• 57,500 pounds
• 104,900 pounds
• 58,900 pounds
• 81,900 pounds

Answer 1

			Feb	mar	April
Sales units			11400	11900	13400
Add: ending inventory			2380	2680
Total			13780	14580
Less: Beginning inventory			2280	2380
Production units			11500	12200
Ram material req. per unit			5	5
Total Production needs			57500	61000
Add: ending inventory			24400
Total requirement			81900
Less: beginning inventory			23000
Total Purchase in Feb			58900
Answer is 58900 pounds