RS is currently preparing the production budget for Product A and the material purchase budget for material X for the forthcoming year. Each unit of Product A requires 5 kgs of material X.

The anticipated opening inventory for Product A is 5,000 units and the company wishes to increase the closing inventory by 30% by the end of the year.

Updated: October 2013 8

The anticipated opening inventory for material X is 50,000 kgs and in order to avoid stock outs the required closing inventory has been increased to 60,000 kgs.

The Sales Director has confirmed a sales requirement of 70,000 units of Product A. What will be the purchases budget for material X?

A. 347,500 kgs

B. 350,000 kgs

C. 357,500 kgs