Alliance Company budgets production of 23,000 units in January and 27,000 units in the February. Each finished unit requires 4 pounds of raw material K that costs $2.00 per pound. Each month's ending raw materials inventory should equal 30% of the following month's budgeted materials. The January 1 inventory for this material is 27,600 pounds. What is the budgeted materials needed in pounds for January?

Question

Business

Skylar Hurley

14 December, 03:39

Alliance Company budgets production of 23,000 units in January and 27,000 units in the February. Each finished unit requires 4 pounds of raw material K that costs $2.00 per pound. Each month's ending raw materials inventory should equal 30% of the following month's budgeted materials. The January 1 inventory for this material is 27,600 pounds. What is the budgeted materials needed in pounds for January?

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Olivia Riddle · Answer 1

Total = 96,800 pounds

Explanation:

To calculate the direct material requirement, we need to use the following formula:

Budgeted material = required for production + desired ending inventory - beginning inventory

Budgeted material:

Production for January = (23,000*4) = 92,000

Desired ending inventory = (27,000*4) * 0.3 = 32,400

Beginning inventory = (27,600)

Total = 96,800 pounds