Saphire Company budgeted the following production in units for the second quarter of the year: April 45,000 May 38,000 June 42,000 Each unit requires 5 pounds of raw material

Management Aug 19, 2020

Saphire Company budgeted the following production in units for the second quarter of the year:

April

45,000

May

38,000

June

42,000

Each unit requires 5 pounds of raw material. Saphire's policy is to have 30% of the following month's production needs for materials in inventory. This policy was met in March.

Desired beginning inventory for April in pounds equals:

Group of answer choices

A) 67,500 pounds

B) 45,600 pounds

C) 57,000 pounds

D) 54,000 pounds

Expert Solution

Computation of Desired Beginning Inventory for April in Pounds:

April's Raw Material requirement = 45,000 units * 5 pounds = 225,000 pounds

Desired Ending Inventory for March = 30% of April's production needs

= 30% of 225,000 pounds

Desired Ending Inventory for March = 67,500 pounds

So, Desired Ending Inventory for March or Desired Beginning Inventory for April in Pounds is 67,500 pounds.

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