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Yummy Foods expects to have 53,000 pounds of raw materials inventory on hand on March 31, the end of the current year. The company budgets the following production (in units) for April through July, inclusive:

- April: 137,000
- May: 147,000
- June: 173,000
- July: 137,000

At the end of each month, the firm desires its ending raw material inventory to be 15% of the next month's production needs. Each finished unit requires two pounds of raw materials.

What are Yummy Foods’ budgeted purchases (in pounds) of raw materials for June?

Multiple Choice:
A. 335,200
B. 346,000
C. 356,800
D. 387,100
E. 439,000

Answer :

Final answer:

To calculate the budgeted purchases of raw materials for June, we need to determine the ending inventory for each month leading up to June and apply the desired ending inventory percentage. The budgeted purchases for raw materials in this case would be 346,000 pounds.

Explanation:

To calculate Yummy Foods' budgeted purchases of raw materials for June, we need to determine the ending raw material inventory for each month leading up to June. Starting with the given raw material inventory on March 31 and using the production needs and desired ending inventory percentages, we can calculate the ending inventory for each month. Then, we multiply the production needs for June by the desired ending inventory percentage for July to find the budgeted ending inventory for June. Finally, we subtract the beginning inventory for June to obtain the budgeted purchases of raw materials for June.

In this case, the budgeted purchases of raw materials for June would be 346,000 pounds.

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