Question

Page 5 of 13 400000 Era of 7 Digital Manufacturing is expecting very strong growth in Sales over the coming year. This data is summarized below: of mis ubor. Quarter S2800 First Seconet Third Fourth 4 po Sales Units 100,000 115,000 132.000 150,000 To keep up with demand, the company has decided to increase its leve Perfikished goods inventory at the end of each quarter to 20% of next quarter sales. The production supervisor is concerned about the availability of materials to maintain this aggressive schedule and so has asked the Procurement Department to maintain ending quarterly raw material inventories equal to 50% of the next quarter's production needs. If each unit of product requires four pounds of raw materials, how much material should the Procurement Department purchase in the second quarter of the year? A. 473,600 118,400 442.800 D. 508,000 E. None of the above Endling - Beg + Purchases - COGS 230,000 DELL

Answer 1

AST end 30 - Sales Units (gruen) - 100.000 115000 132000 150,000 Finished goods Stock' COK- DA 23000 26 40075 30,000 mA- 1. Raw material stock 5920067800 WN) Finished quarter goods is stock at the end of lain 2014. of Sales to next quarter, i Finished goods stock of - Quarter 1 Quadern 2 2 0% of 115000 . 23000 : _ 20.4 132000 3 26400. 2 AN-2: Raw material stock at the end of quarter is 50% of next quartex needs each poodustion Stock of the end of and raw material to be main tened at of Quarter 1 depends on production Quarter production of and Quarter - Sales units + Closing stock - units - Opening stock units = 15000 + 26400 - 23000 (opening stock of and Quarter = closing stock of 1st Quarter) 19400

DO Raw material losing at the end of Quarter 1 - 1184000 x 500% ___ 59200 Similarly praw material Stock of Quarter 2 - = 50% of panduution of Quarter 3 - 50% ( 139000 + 30,000 - 26,400) - 50% of K12000 135600 = thooo 67800 Procurement of raw material for and Quarter - = Raw material po purchased should meet prodution requirement – Minimun Josing stock to be maintened o prodution of Quartex 2 = 118400 (calculated as aboue) Closing stock of Rawiz material 67800 Opening stock of raw material = (59200) ___127000 unite ... Raw material to be purchased = 4 pounds x 127000 units = 508000 [option D].
thus, the answer is option D

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