Osage Inc. has actual sales for May and June and forecast sales for July, August

Question

Osage Inc. has actual sales for May and June and forecast sales for July, August, September, and October as follows: Actual: May 5,810 units June 6,180 units Forecast: July 5,920 units August 6,850 units September 5,680 units October 5,330 units Each unit of finished product requires 4 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 50% 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.

Explanation / Answer

Calculation of Raw Material to be purchased May June July August Sep Oct Sales 5810 6180 5920 6850 5680 5330 Raw Material Sales*4 23240 24720 23680 27400 22720 21320 Op. 25300 13700 11360 10660 Cl. 25300 13700 11360 10660 0 To be purchased 12080 25060 22020 10660 Sales+ Closing-Opening Units required to be purchased in July are 12080 pounds August 25060 Pounds

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.