# Lyon Factory Ltd. manufactures two products: chairs and stools. Each chair requires 3 m of upholstery and 4 kg of

## Question:

Lyon Factory Ltd. manufactures two products: chairs and stools. Each chair requires 3 m of upholstery and 4 kg of steel. Each stool requires 2 m of upholstery and 5 kg of steel. Upholstery costs \$2 per metre and steel costs \$5 per kilogram.
Lyon Factory expects inventories at January 1, 2012, to be as follows:

Inventories of raw materials should not be allowed to fall below the amounts given as at January 1, 2012. Inventories of finished furniture at the beginning of each month should be enough to cover 25% of the anticipated sales for that month.
Upholstery is ordered in units of 100 m and steel in units of 50 kg.
Half of the materials purchased are paid for in the month of purchase and the other half in the following month.
The sales budget for the first three months of the year 2012 is as follows:

Instructions
Calculate the cash disbursements in February for purchases of steel. Show all your supporting calculations?

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