The Following Budgeted Information Is Provided One Pound of Materials Is Required for Each Finished Unit

question 143

Multiple Choice

The following budgeted information is provided:
$$\begin{array} { | l | l | l | l | } \hline \text { Month } & 1 & 2 & 3 \\\hline \text { Sales in units } & 15,000 & 20,000 & 18,000 \\\hline \text { Production in units } & 16,000 & 22,000 & 15,000 \\\hline\end{array}$$
One pound of materials is required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. At the beginning of Month 1, there were 3,200 lbs. of materials on hand. Purchases of raw materials for Month 1 would be (in pounds) :

• A) 25,000.
• B) 23,400.
• C) 17,200.
• D) 22,000.