Reaser Corporation Makes One Product

question 224

Multiple Choice

Reaser Corporation makes one product. Each unit of finished goods requires 4 pounds of raw materials.The ending finished goods inventory equals 10% of the following month's sales.The ending raw materials inventory equals 40% of the following month's raw materials production needs.If 50,600 pounds of raw materials are required for production in June, then the budgeted raw material purchases for May is closest to:

• A) 56,600 pounds
• B) 42,056 pounds
• C) 71,144 pounds
• D) 36,360 pounds

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Definitions:

Demand Variability

Fluctuations in customer demand over a period, impacting inventory management, production planning, and supply chain efficiency.

Capacity Requirements Planning (CRP)

A process used in manufacturing and production planning to determine the resources needed to meet production goals.

Materials Requirement Plan

A system used in manufacturing to calculate the materials and components required to manufacture a product, ensuring materials are available for production as needed.