Question
KuoKuts makes one product and it provided the following information to help prepare the master budget for its first four months of operations: The budgeted
KuoKuts makes one product and it provided the following information to help prepare the master budget for its first four months of operations:
The budgeted selling price per unit is $61. Budgeted unit sales for May, June, July, and August are 8,000, 11,000, 13,000, and 13,000 units, respectively. All sales are on credit.
35% of credit sales are collected in the month of the sale and 65% in the following month.
The ending finished goods inventory equals 20% of the following months unit sales.
The ending raw materials inventory equals 24% of the following months raw materials production needs. Each unit of finished goods requires 6 pounds of raw materials. The raw materials cost $9.00 per pound.
25% of raw materials purchases are paid for in the month of purchase and 75% in the following month.
Assume 46,000 pounds of raw materials are needed to meet production in July, how many pounds of raw materials should be purchased in June? Note that with the above given information, you can compute the budgeted pounds of raw material needed to meet production in July, but to solve this problem, ignore your computed number of pounds of raw material needed to meet production in July and use the number given.
Round your answer to the nearest whole number.
(HINT: Begin with the PRODUCTION budget before moving to the Raw Materials numbers)
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