Retro, Inc

question 19

Essay

Retro, Inc., produces a single product. The projected sales for the first month of the coming year and the beginning and ending inventory data are as follows:
Each unit requires three pounds of material costing £2 per pound. The beginning inventory of raw materials is 2,500 pounds, and the company wants to have 4,500 pounds of material in inventory at the end of the month. Each unit requires one hour of direct labour time, which is billed at £8 per hour.
Required:

a.
Prepare a production budget for the first month.
b.
Prepare a direct materials purchases budget for the first month.

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Definitions:

Firm

A business organization that sells goods or services to make a profit.

Price-Taking Firms

Firms that accept the market price as given and have no power to influence it.

Unrealistic

Lacking consideration of real situations; impractical or idealistic.

Restrictive

A term describing measures or policies that limit or constrain actions, activities, or expansions.