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

question 26

Multiple Choice

The following budgeted information is provided:
$$\begin{array} { | l | c | c | c | } \hline \text { Month } & \mathbf { 1 } & \mathbf { 2 } & \mathbf { 3 } \\\hline \text { Sales in units } & 15,000 & 20,000 & 18,000 \\\hline \text { Production in units } & 16,000 & 22,000 & 15,000 \\\hline\end{array}$$ One pound of material 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 was 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.

---

Definitions:

Margin Call

A demand by a broker for an investor to deposit additional funds or securities to maintain the required minimum margin account balance.

Short Sale

A transaction where an investor borrows a security and sells it on the open market, planning to buy it back later at a lower price.

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account after a purchase has been made, to continuing holding the position.

Secondary Markets

Markets where investors buy and sell securities or assets from other investors, rather than from issuing companies directly.