Question

The Molson Company had budgeted production for the year as follows: Quarter 1 2 3 4 Production in units 10,000 12,000 16,000 14,000 Four pounds of raw materials are required for each unit produced. Raw materials on hand at the start of the year total 4,000 lbs. The raw materials inventory at the end of each quarter should equal 10% of the next quarter's production needs in materials. Budgeted purchases of raw materials in the second quarter would be:

Answer 1

Answer:

49,600 pounds

Explanation:

Prepare a Production Budget as Follows :

                                                Q1                 Q2                    Q3                  Q4

Budgeted Production        10,000           12,000              16,000           14,000

Budgeted Materials         40,000           48,000             64,000           56,000

Add Budgeted c/stock       4,800              6,400               5,600

Total Materials                  44,800            54,400             69,600

Less Budgeted o/stock     (4,000)            (4,800)             (6,400)

Budgeted Material Purch 40,800            49,600             63,200

Therefore Budgeted purchases of raw materials in the second quarter would be  49,600 pounds.