21. Prester Corporation has budgeted production for next year as follows Quarter

Question

21. Prester Corporation has budgeted production for next year as follows Quarter Firet Second Thirdl Fourth 0,000 70,000 80,000 90,000 Production in units Two pounds of material A are required for each unit produced. The company has a maintaining a stock of material A on hand at the end of each quarter equal to 25% of the net quarter's production needs for material A. A total of 30,000 pounds of material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be of A. 140,000 pounds B. 135,000 pounds C. 145,000 pounds D. 180,000 pounds

Explanation / Answer

ans) option (C) 145,000 pounds

Raw materials needed for production for second quarter = 70,000 X 2 = 140,000

Add: Desired closing stock for second quarter (80,000 X 2 X 25%) = 40,000

Less:Opening stock for second quarter = (70,000 X 2 X 25%) = (35000)

Purchases of material A for second quarter = 145000

Add: Desired closin

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