Marst Corporation's budgeted production in units and budgeted raw materials purchases over the next three months are given below: January February March Budgeted production (in units) 94,000? 80,000 Budgeted raw materials purchases (in pounds) 213,800 239,800 295,800 Two pounds of raw materials are required to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs. The company is expected to have 26,000 pounds of raw materials on hand on January 1. Budgeted production for February should be: rev: 10_27_2016_QC_CS-67319 191,800 units 48,000 units 96,000 units 137,000 units

Question

Remington Simmons

Business

13 March, 05:02

Marst Corporation's budgeted production in units and budgeted raw materials purchases over the next three months are given below: January February March Budgeted production (in units) 94,000? 80,000 Budgeted raw materials purchases (in pounds) 213,800 239,800 295,800 Two pounds of raw materials are required to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs. The company is expected to have 26,000 pounds of raw materials on hand on January 1. Budgeted production for February should be: rev: 10_27_2016_QC_CS-67319 191,800 units 48,000 units 96,000 units 137,000 units

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Ann Cabrera · Answer 1

137,000

Explanation:

Jan Feb March

Units produced 94000 80000

Raw materials 26,000

Raw materials 213800 239800 295800

Ratio of raw material to a product is 2:1

Ending inventory = 30% of next month production

Represent budgeted production in February by F

239800=2F + (80000*2*30%) - (2F*30%)

239800 = 2F + 48000 = 0.6F

239800-48000=2F-0.6F

191800=1.4F

F = 191800/1.4 = 137000