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22 December, 03:19

The following are budgeted dа ta:Sales (units) Production (units) April 15,000 18,000May 20,000 19,000June 18,000 16,000Two pounds of material is required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. Purchases of raw materials for May should be:a. 36,800 poundsb. 39,200 poundsc. 52,000 poundsd. 38,000 pounds

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  1. 22 December, 03:27
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    Total = 36,800 pounds

    Explanation:

    Giving the following information:

    Sales (units) - Production (units):

    May: 20,000 - 19,000

    June: 18,000 - 16,000

    Two pounds of material is required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs.

    Purchases for May = production for the month + desired ending inventory - beginning inventory

    Production = 19,000*2 pounds = 38,000 pounds

    Desired ending inventory = (16,000*2) * 0.2 = 6,400 pounds

    Beginning inventory = (38,000*0.2) = (7,600)

    Total = 36,800 pounds
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