TJR, Inc. is working on its raw materials purchases budget for the month of February. Sales for February and March are projected to be 40,000 and 45,000 units, respectively. Production from the production budget is to be 43,000 and 39,000 units for February and March. Each unit produced requires 4 pounds of direct materials, costing $10 per pound. TJR likes to keep 40% of the required direct materials for the next month in inventory at all times, but at the end of January, the ending direct materials inventory was 62,000 pounds.

How many pounds of direct materials should TJR purchase in February to achieve their planned inventory level at the end?

A. 172,400
B. 53,000
C. 171,600
D. 43,400

Question

High School

Answer :

lhevangelineohagwam lhevangelineohagwam · Answer 1 · 2024-06-25T18:18:00-04:00

The direct materials TJR Inc. should purchase in February to get back to their planned inventory level at the end is A. 172,400 pounds.

We will calculate the pounds of direct materials that TJR should purchase in February in the following way:

First, the direct materials required for February production:

Units to be produced in Feb = 43,000

Pounds of direct materials per unit = 4

Total direct materials needed for February: 43,000 units * 4 pounds/unit = 172,000

Next, we compute the desired ending inventory for February:

Units to be produced in March = 39,000

Total direct materials needed for March production = 39,000 units * 4 units/pounds = 156,000 pounds

Desired ending inventory for Feb (40% of March's requirement) = 156,000 pounds * 0.40 = 62, 400 pounds.

Then, find the total direct materials required in Feb:

Total direct materials for Feb production = 72,000 pounds

Desired ending inventory for Feb = 62,400 pounds

Total direct materials required = 172,000 pounds + 62,400 pounds = 234, 400 pounds

Finally, we compute the direct materials to be purchased in Feb:

Beginning inventory for Feb (from the end of Jan)= 62,000 pounds

Direct materials to be purchased = 234,400 pounds - 62,000 pounds

= 172,400 pounds.

So, TJR should purchase 172,400 pounds of direct materials in February to return to their targeted inventory level by the end of the month