ABC Company’s budgeted sales for June, July, and August are 15,600, 19,600, and 17,600 units, respectively. ABC requires 30% of the next month’s budgeted unit sales as finished goods inventory each month. Budgeted ending finished goods inventory for May is 4,680 units. Each unit that ABC Company produces uses 3 pounds of raw material. ABC requires 25% of the next month’s budgeted production as raw material inventory each month.

Required:
Calculate the number of pounds of raw material to be purchased in June.

Raw material purchase budget for June 64,650 pounds

Explanation:

Production budget for June = Sales budget + closing inventory- + Opening inventory

Closing inventory of products for June

-30%× July budgeted sales= 30% ×19,600

                                  =5,880

July production production budget

t= 19600 + (30%× 17,600)- 5,880

 =19600 + 5280 - 5880 =19,000 units

July usage budget for raw material

Usage budget = production budget × standard material per unit

= 19,000× 3 pounds =57,000 pounds

Production budget for June = 15600 + 5,880 -4,680

                                            = 16,800 units

Material usage budget = 16,800×3 pounds = 50400 pounds

Material purchase = Usage budget  + closing inventory of material - opening inventory

                              = 50,400 + (25%× 57000) - 0 =

                              =50,400 + 14250 =64,650 pounds

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.