The Tobler Company had budgeted production for the year as follows: 4 pounds of
ID: 2463397 • Letter: T
Question
The Tobler Company had budgeted production for the year as follows:
4 pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 7,000 lbs. The raw materials inventory at the end of each quarter should equal 9% of the next quarter's production needs in materials. Budgeted purchases of raw materials in the second quarter would be (in lbs.):
A. 37080 lbs
B. 36360 lbs
C. 37440 lbs.
D. 36000 lbs
Please show the Math
Quarter 1 2 3 4 Production in units 10,000 9,000 13,000 11,000Explanation / Answer
Budgeted production for 2nd quarter = 9,000 * 4 = 36,000 pounds
Ending inventory for 2nd quarter = 3rd quarter production needs in material * 9%
= (13,000 * 4) * .09 = 4,680 pounds
Beggining inventory for 2nd quarter = 2nd quarter production needs in material * 9%
= (9,000 * 4) * .09 = 3,240 pounds
Budgeted Purchase of raw material = Ending inventory + Budgeted production - Beginning inventory
= 4,680 + 36,000 - 3,240 = 37,440 pounds
So the correct option C
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