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San Fernando Fertilizer Company plans to sell 240,000 units of finished product in July and anticipates...

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Accounting

San Fernando Fertilizer Company plans to sell 240,000 units offinished product in July and anticipates a growth rate in sales of6 percent per month. The desired monthly ending inventory in unitsof finished product is 80 percent of the next month's estimatedsales. There are 192,000 finished units in inventory on June 30.Each unit of finished product requires 5 pounds of raw material ata cost of $1.75 per pound. There are 720,000 pounds of raw materialin inventory on June 30.

Required:
1.

Compute the company's total required production in units offinished product for the entire three-month period ending September30. (Do not round intermediate calculations. Round yourfinal answer to the nearest unit.)

Total required production in units

  

2.

Independent of your answer to requirement (1), assume thecompany plans to produce 680,000 units of finished product in thethree-month period ending September 30, and to have raw-materialinventory on hand at the end of the three-month period equal to 25percent of the use in that period. Compute the total estimated costof raw-material purchases for the entire three-month period endingSeptember 30.

Total estimated cost  

  

Answer & Explanation Solved by verified expert
3.8 Ratings (588 Votes)
JulyAugustSeptemberTotalBudgtedSales 24000000254400002696640076406400AddDesired Ending Sales    See Answer
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