Production estimates for August are as follows: $\begin{array} { l r } \text { Estimated inventory (units), August 1 } & 3,000 \ \text { Desired inventory (units), August } 31 & 2,000 \ \text { Expected sal es volume (units), August } & 40,000 \end{array}$
For each unit produced, the direct materials requirements are as follows:
$\begin{array}{ll}
\text { Direct material A ( } \$ 2 \text { per } 1 \mathrm{~b} .) & 5 \mathrm{lbs} . \
\text { Direct material B }(\$ 11 \text { per } 1 \mathrm{~b} .) & 1 \mathrm{lb} .
\end{array}$ ? The number of pounds of materials A and B required for August production is:
A) 195,000 lbs.of A; 39,000 lbs.of B.
B) 200,000 lbs.of A; 40,000 lbs.of B.
C) 205,000 lbs.of A; 41,000 lbs.of B.
D) 210,000 lbs.of A; 42,000 lbs.of B.

Question

Quizplus · Accepted Answer

To calculate the required pounds of materials A and B for August production, first determine the number of units to be produced in August. This is calculated as follows: $$ \text{Units to be produced} = \text{Expected sales volume} + \text{Desired inventory at end of August} - \text{Estimated inventory at beginning of August} $$$$ \text{Units to be produced} = 40,000 + 2,000 - 3,000 = 39,000 $$For material A (5 lbs. per unit):$$ 39,000 \text{ units} \times 5 \text{ lbs./unit} = 195,000 \text{ lbs.} $$For material B (1 lb. per unit):$$ 39,000 \text{ units} \times 1 \text{ lb./unit} = 39,000 \text{ lbs.} $$Therefore, the correct answer is 195,000 lbs. of A and 39,000 lbs. of B.

Production Estimates for August Are as Follows For Each Unit Produced, the Direct Materials Requirements Are as r