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Charm Enterprises’ production budget shows the following units to be produced for the coming three months: Units...

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Accounting

Charm Enterprises’ production budget shows the following units tobe produced for the coming three months:

Units to be produced:
April: 3,210 May: 3,530 June: 3,410

A finished unit requires three ounces of a key directmaterial. The March 31 Raw Materials Inventory has 3,177 ounces(oz.) of the material. Each month’s ending Raw Materials Inventoryshould be 30% of the following month’s production needs. Thematerials to be purchased during May should be:

Answer & Explanation Solved by verified expert
3.8 Ratings (555 Votes)

Schedule of Raw material to be purchased in May

May

(A)

Units to be Produced

3530

Units

(B)

Material Required per Unit

3

Ounces

(C=(A*B))

Total Material Required for Production

10590

Ounces

(D)

Add: Desired Closing Raw material Inventory

3069

Ounces

(E=(C+D))

Raw material Needed

13659

Ounces

(F)

Less: Opening Inventory Available

3177

Ounces

(G=(E-F))

Raw material to be purchased

10482

Ounces

Working Note

April

May

June

(A)

Units to be Produced

3210

3530

3410

(B)

Material Required per Unit (Ounces)

3

3

3

(C=(A*B))

Total Material Required

9630

10590

10230

(D)

Add: Desired Closing Raw material Inventory

3177*

3069**

(E=(C+D))

Total Raw material Needed

12807

13659

(F)

Less: Opening Inventory Available

3177

3177

3069

(G=(E-F))

Raw material to be purchased

9630

10482

Data for June is Incomplete as no details about ending raw material was given in the question.

*(10590x30%)

**(10230x30%)
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