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20 February, 21:11

Pitt corp makes and sells a single product, widgets. two pounds of sand are needed to make one widget. budgeted production of widgets for the next few months follows:

september 25,000 units

october 31,000 units

the company wants to maintain monthly ending inventories of sand equal to 20% of the following months production needs. on august 31, 10,000 pounds of sand were on hand.

instructions

how much sand should be purchased in september?

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Answers (1)
  1. 20 February, 23:09
    0
    52,400 pounds

    Explanation:

    October:

    Sand needed for units to produce:

    = Budgeted production of Widgets * Sand needed per unit (Pounds)

    = 31,000 units * 2

    = 62,000

    September:

    Sand needed for units to produce:

    = Budgeted production of Widgets * Sand needed per unit (Pounds)

    = 25,000 units * 2

    = 50,000

    Desired ending Inventory of sand:

    = 20% of next month production needs

    = 20% * 62,000

    = 12,400

    Total sand needs = Sand needed for units to produce + Desired ending Inventory of sand

    = 50,000 + 12,400

    = 62,400

    Sand To be purchased = Total sand needs - Beginning inventory of sand

    = 62,400 - 10,000

    = 52,400 pounds

    Therefore, 52,400 pounds of sand should be purchased in September.
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