Answer:
60,000 units
Explanation:
January February
Budgeted production 50,000 60,000 (4)
Raw materials per unit 2 pounds 2 pounds
Raw materials needed 100,000 120,000 (3)
Add: Ending raw materials 36,000 (2) 48,000
Raw materials available 136,000 (1) 168,000
Less: Beginning raw 30,000 36,000
materials
Budgeted raw materials 106,000 132,000
Note:
1. Budgeted raw materials for January = Raw materials available - Beginning raw materials
106,000 = Raw materials available - 30,000
Raw materials available = 106,000 + 30,000 = 136,000 pounds
2. Raw materials needed + Ending raw materials = Raw materials available
100,000 + Ending raw materials = 136,000
Ending raw materials = 136,000 - 100,000 = 36,000
3. As the company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs, the raw materials needed for the month of February -
Ending raw materials for January = Raw materials needed for February × 30%
or, 36,000 = Raw materials needed for February × 30%
Raw materials needed for February = 36,000 ÷ 30%
Therefore, Raw materials needed for February = 120,000
4. Budgeted production × Raw materials per unit = Raw materials needed
Budgeted production = Raw materials needed ÷ Raw materials per unit
Budgeted production = 120,000 ÷ 2 pounds = 60,000 units
