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Alliance Company budgets production of 23,000 units in January and 27,000 units in the February. Each finished unit requires 4 pounds of raw material K that costs $2.00 per pound. Each month's ending raw materials inventory should equal 30% of the following month's budgeted materials. The January 1 inventory for this material is 27,600 pounds. What is the budgeted materials needed in pounds for January?

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Answer:

Total= 96,800 pounds

Explanation:

To calculate the direct material requirement, we need to use the following formula:

Budgeted material= required for production + desired ending inventory - beginning inventory

Budgeted material:

Production for January= (23,000*4)= 92,000

Desired ending inventory= (27,000*4)*0.3= 32,400

Beginning inventory= (27,600)

Total= 96,800 pounds

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