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    Sadakathulla Poil
    production budget
    RP - Thread posted August 11, 2010 by Sadakathulla Poil
    444 Views, 3 Answer
    Title:
    production budget
    Content:

    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

    • Ashraf Kamal Hamed
      posted August 12, 2010 by Ashraf Kamal Hamed

      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

    • Ahmed Helal Abdoullah
      posted August 12, 2010 by Ahmed Helal Abdoullah

      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

    • Sadakathulla Poil
      posted August 14, 2010 by Sadakathulla Poil

      Ashraf/ Ahmed,

      Thank you very much for the answer.

      Thanks

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