Company has budgeted production for next year as follows: Quarter Production in units First Second Third Fourth 10,000 12,000 16

Accounting Nov 22, 2020

Company has budgeted production for next year as follows: Quarter Production in units First Second Third Fourth 10,000 12,000 16.000 14,000 Four kilograms of raw materials are required for each unit produced. Raw materials on hand at the start the year total 4.000 fotograms. The raw materials Inventory at the end of each quarter should equal 10% of the next quarter's production needs Budgeted purchases of raw materials in Kilograms in the third quarter will be
Multiple Choice 63,200. O 56,800 50.400 ? O 62,400

Expert Solution

Correct option is 63,200

Explanation -

Quarterly Budget	First	Second	Third	Fourth
Opening Raw material (a)	4,000	4,800	6,400	5,600
Production in units (b)	10,000	12,000	16,000	14,000
Requirement (c = 4 * b)	40,000	48,000	64,000	56,000
Purchase of Raw material in Kgs (d = c + d - a)	40,800	49,600	63,200	50,400
Closing (d = Next quarter production * 4 * 10%)	4,800	6,400	5,600	-

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