Lea Company has budgeted the following unit sales: 2020 January February March April May Units Required...

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Lea Company has budgeted the following unit sales: 2020 January February March April May Units Required For the first quarter of 2020: 10,000 8,000 9,000 11,000 15,000 The finished goods units on hand on December 31, 2019, was 1,000 units. Each unit requires 2 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 10% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 20% of the pounds needed for the following month's production. There were 3,920 pounds of raw materials on hand at December 31, 2019. 1) Compute the required production units for the first quarter. 2) Compute the total cost of direct materials purchases. Lea Company has budgeted the following unit sales: 2020 January February March April May Units Required For the first quarter of 2020: 10,000 8,000 9,000 11,000 15,000 The finished goods units on hand on December 31, 2019, was 1,000 units. Each unit requires 2 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 10% of next month's anticipated sales. They also have a policy of maintaining a raw materials inventory at the end of each month equal to 20% of the pounds needed for the following month's production. There were 3,920 pounds of raw materials on hand at December 31, 2019. 1) Compute the required production units for the first quarter. 2) Compute the total cost of direct materials purchases.

Answer rating: 100% (QA)

1 Compute the required production units for the first quarter of 2020 Step 1 Calculate the desired ending finished goods inventory for each month 10 o... View the full answer