4. (15 pts) The Marstall Company. has provided the following budget information

Question

4. (15 pts) The Marstall Company. has provided the following budget information for 2011: Month April May June Sales in Units Production in Units25,000 27,000 24,000 24,000 29,000 31,000 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. It is projected that at the beginning of April, there will be 16,000 pounds of material on hand. Required: Prepare a detailed schedule showing the pounds of material to be purchased in May.

Explanation / Answer

Purchase budget in may :

May Production units 31000 Raw material per unit 2 Raw material for production 62000 Add :Desired ending inventory (24000*2*20%) 9600 Total 71600 Les: Beginning inventory (62000*20%) -12400 Purchase raw material in may 59200

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