Ajax Manufacturing produces a single product, which takes 8.0 pounds of direct material per unit produced. The company's policy is to maintain an end-of-quarter inventory of materials equal to 25 percent of the following quarter's material requirements for production. At the end of the 4th quarter, there were 72,000 pounds of material on hand. Assume it is currently the end of the first quarter of the new year. a. How many units of product were produced this quarter? b. Under the assumption that production will increase by 10% in the second quarter, what are the direct material requirements (in pounds) for planned production in the second quarter?
Ajax Manufacturing produces a single product, which takes 8.0 pounds of direct material per unit produced. The company's policy is to maintain an end-of-quarter inventory of materials equal to 25 percent of the following quarter's material requirements for production. At the end of the 4th quarter, there were 72,000 pounds of material on hand. Assume it is currently the end of the first quarter of the new year. a. How many units of product were produced this quarter? b. Under the assumption that production will increase by 10% in the second quarter, what are the direct material requirements (in pounds) for planned production in the second quarter?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 15E: Palmgren Company produces consumer products. The sales budget for four months of the year is...
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Ajax Manufacturing produces a single product, which takes 8.0 pounds of direct material per unit produced. The company's policy is to maintain an end-of-quarter inventory of materials equal to 25 percent of the following quarter's material requirements for production. At the end of the 4th quarter, there were 72,000 pounds of material on hand. Assume it is currently the end of the first quarter of the new year.
a. How many units of product were produced this quarter?
b. Under the assumption that production will increase by 10% in the second quarter, what are the direct material requirements (in pounds) for planned production in the second quarter?
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