The Tobler Corporation has budgeted production for next year as follows: Quarter

Question

The Tobler Corporation has budgeted production for next year as follows: Quarter FirstSecond Third Fourth Production in units 10,000 12,000 16,000 14,000 Four pounds of raw material inventory at the end of each quarter should equal 10% of the would be: s are required for each unit produced. Raw materials on hand at the start of the year total 4,000 pounds. The raw materials next quarter's production needs. Budgeted purchases of raw materials in the third quarter Multiple Choice 63,200 pounds 62,400 pounds 56,800 pounds 60.400 pounds Prox :10 0125 ill Nost>

Explanation / Answer

63,200 Pounds

Working:

Step-1:Raw material rquired for production for 3rs quarter Raw Material Required for production = Production in units * Raw material per unit required =        16,000 x 4 =        64,000 Step-2:Beginning Inventory of Raw material of 3rd quarter Ending inventory of 2nd quarter becomes beginning inventory of 3rd quarter Ending Inventory of 2nd quarter = 3rd Quarter Production need *10% = (16000*4)*10% =           6,400 Step-3:Ending Inventory of 3rd Quarter Ending Inventory of 3rd quarter = 4th Quarter Production need *10% = (14000*4)*10% =           5,600 Purchases of Raw Material = Raw Material Required for production + Ending Inventory of 3rd quarter - Beginning Inventory of 3rd quarter =        64,000 +         5,600 -         6,400 =        63,200 Pounds

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