
Rokat Corporation is a manufacturer of tables sold to schools, restaurants, hotels and other institutions. Rokat manufactures the table tops, but an outside supplier sells the table legs to Rokat, The Assembly Department takes a manufactured table top and attaches the 4 purchased table legs. It takes 20 minutes of labor to assemble a table. The company follows a policy of producing enough tables to ensure t h a t 4 0% of next month's sales are in the finished goods inventory. Rokat also purchases sufficient raw materials to ensure that raw materials inventory is 6 0% of the following month's scheduled production.
Please details your anwer with explantion.. will be highly apreciated.
Assume the required production for August and September is 1,600 and 1,8 00 units respectively, and the number of table legs in the July 31 raw materials inventory is 4,200 units. The number of table legs to be purchased in August is:
a) 2,200 legs
b) 6,520 legs.
c) 6,400 legs.
d) 9,400 legs.
Answer
I think the corrct answer is ( B )
required row material for August = 4 legs * 1600 = 6400
required row material for September
60% of september production = 4 legs * 1800 * 60 % = 4320
total legs needed = 10720
Inventory at 31 july = ( 4200 )
net = 6520
Next month production * 60 % = ending inventory of raw materials for this month
August Production 1600 * 4 = 6400
(-) Beginning inv = 4200
(+)Ending inv 1800 * 4 * 60% = 4320
= Purchases = 6520
Ashraf/ Ahmed,
Thank you very much for the answer.
Thanks