Sue is the purchasing manager for Paper Goods Incorporated. Sue's budget for January and February was as follows:

At the end of February, Sue's boss asked her, "Why are you ordering so many materials? The inventory stockroom is overflowing with materials." Puzzled, Sue checked her order amounts and saw that she had ordered the exact amount as stated by the budget. Sue then spoke to the production manager who explained that the plant had been running at only \(90 \%\) capacity for the past two months due to lower demand.
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A. If sales and production levels were \(10 \%\) lower than budgeted, how many pounds of raw materials are on hand at the end of February?
B. What is the problem with this system, and how would you suggest it be improved?

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January February Finished goods to produce (units) 10,000 11.000 Add: Desired ending inventory 1,100 1,100 Subtotal 11,100 12.100 Less: Beginning inventory 1,000 1.100 Total 10,100 11.000 Pounds of raw materials per unit 2.0 2.0 Required pounds of raw materials 20,200 22,000 Add: Desired ending inventory of raw materials 2.200 2.200 Less: Beginning inventory of raw materials 2.020 2,200 Total raw material needs (pounds) 20,380 22,000