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Homework answers / question archive / 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 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
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.
