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Production estimates for August are as follows: Estimated inventory (units), August 1 12,000 Desired inventory (units), August 31 9,000 Expected sales volume (units), August 75,000 For each unit produced, the direct materials requirements are as follows: Material A ($5 per lb.) 3 lbs. Material B ($18 per lb.) 1/2 lb. The number of pounds of Materials A and B required for August production is a. 225,000 lbs. of A; 37,500 lbs. of B b. 234,000 lbs. of A; 39,000 lbs. of B c. 216,000 lbs. of A; 36,000 lbs. of B d. 216,000 lbs. of A; 72,000 lbs. of B

Answer :

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Answer: C) 216,000 lbs. of A; 36,000 lbs. of B

Explanation:

Given the following :

Estimated inventory (units), August 1, = 12,000 Desired inventory (units), August 31, = 9,000

Expected sales volume (units) = 75,000

Direct material requirement:

Material A ($5 per lb.) = 3 lbs

Material B ($18 per lb.) = 1/2 lbs

The number of pounds of material A and B required for August production :

Unit of product required for August production :

Expected sales volume + Ending inventory(August 31) - beginning inventory (August 1)

= 75000 + 9000 - 12000

84000 - 12000 = 72,000

Number of pounds required ;

Total Production unit × pounds per unit required

Material A:

72,000 × 3 = 216,000 pounds

Material B:

72,000 × (1/2) = 36,000 pounds

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