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26 April, 13:17

Masterson Company's budgeted production calls for 56,000 liters in April and 52,000 liters in May of a key raw material that costs $1.85 per liter. Each month's ending raw materials inventory should equal 30% of the following month's budgeted materials. The April 1 inventory for this material is 16,800 liters. What is the budgeted materials need in liters for April?

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  1. 26 April, 13:35
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    The budgeted materials need in liters for April is $54,800 liters.

    Explanation:

    For computing the needed budgeted material for April month, following equation is used which is shown below:

    = Budgeted raw material + closing inventory - opening inventory

    where,

    budgeted raw material for April month is $56,000 liters

    Closing inventory is 30% of following month which equals to

    = 52,000 * 30%

    = 15,600 liters

    and, opening inventory is given i. e. 16,800 liters.

    Now, apply these values to the above equation which equals to

    = $56,000 + $15,600 - $16,800

    = $54,800 liters

    Thus, the budgeted materials need in liters for April is $54,800 liters.
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