Question
Production and Purchases Rocky Mountain Culvert produces small culverts for water drainage under two- lane dirt roads. Budgeted unit sales for the sales for the
Production and Purchases Rocky Mountain Culvert produces small culverts for water drainage under two- lane dirt roads. Budgeted unit sales for the sales for the next several months are: Month Sales Septmeber 2,000 October 1,500 Novemeber 800 December 500 At the beginning of September, 200 units of finished goods were in inventory. During the final third of the year, as road construction declines, plans are to have an inventory of finished goods equal to 25 percent of the following month's sales. Each unit of finished good requires 500 pounds of raw materials at a cost of $5 per pound. Management wishes to maintain month end inventories of raw materials equal to 50 percent of the following month's needs. Five hundred thousand pounds of raw materials were on hand at the start pf September. Required a. Prepare a production budget for Septemeber, October, and Novmember b. Prepare a purchase budget in units and dollars for September and October
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