Osage Inc. has actual sales for May and June and forecast sales for July, August
ID: 2427923 • Letter: O
Question
Osage Inc. has actual sales for May and June and forecast sales for July, August, September, and October as follows:
The firm’s policy is to have finished goods inventory on hand at the end of the month that is equal to 75% of the next month’s sales. It is currently estimated that there will be 4,560 units on hand at the end of June. Calculate the number of units to be produced in each of the months of July, August, and September.
***I Have this part:
July 6650
August 5873
September 5438
Each unit of finished product requires 6 pounds of raw materials. The firm’s policy is to have raw material inventory on hand at the end of each month that is equal to 55% of the next month’s estimated usage. It is currently estimated that 25,300 pounds of raw materials will be on hand at the end of June. Calculate the number of pounds of raw materials to be purchased in each of the months of July and August.
This is the part I cannot get; please leave instructions on hhow you found the answer.
Osage Inc. has actual sales for May and June and forecast sales for July, August, September, and October as follows:
Explanation / Answer
a
Calculation of number of units to be produced in each of the months:
May
June
July
August
September
October
Sales Units
6000
6270
6080
6840
5550
5400
Add: Ending finished goods inventory
4,703
4,560
5,130
4,163
4,050
(75% of the next month’s sales)
(6270*75%)
(6080*75%)
(6840*75%)
(5550*75%)
(5400*75%)
Less: Beginning finished goods inventory
(4,703)
(4,560)
(5,130)
(4,163)
Number of units to be produced
6,128
6,650
5,873
5,438
b
Calculation of number of pounds of raw materials to be purchased in each of the months of July and August
June
July
August
September
Number of units to be produced (A)
6,128
6,650
5,873
5,438
Raw Material Per unit (Pounds) (B)
6
6
6
6
Total Usage (Pounds ) = A*B
36,765
39,900
35,235
32,625
Add: Ending raw material inventory
21,945
19,379
17,944
(55% of the next month’s usage)
(39900*55%)
(35235*55%)
(32625*55%)
Less: Begining raw material inventory
(21,945)
(19,379)
Pounds of raw materials to be purchased
37,334
33,800
a
Calculation of number of units to be produced in each of the months:
May
June
July
August
September
October
Sales Units
6000
6270
6080
6840
5550
5400
Add: Ending finished goods inventory
4,703
4,560
5,130
4,163
4,050
(75% of the next month’s sales)
(6270*75%)
(6080*75%)
(6840*75%)
(5550*75%)
(5400*75%)
Less: Beginning finished goods inventory
(4,703)
(4,560)
(5,130)
(4,163)
Number of units to be produced
6,128
6,650
5,873
5,438
b
Calculation of number of pounds of raw materials to be purchased in each of the months of July and August
June
July
August
September
Number of units to be produced (A)
6,128
6,650
5,873
5,438
Raw Material Per unit (Pounds) (B)
6
6
6
6
Total Usage (Pounds ) = A*B
36,765
39,900
35,235
32,625
Add: Ending raw material inventory
21,945
19,379
17,944
(55% of the next month’s usage)
(39900*55%)
(35235*55%)
(32625*55%)
Less: Begining raw material inventory
(21,945)
(19,379)
Pounds of raw materials to be purchased
37,334
33,800
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