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Question - Osage Inc. has actual sales for May and June and forecast sales for July, August, September, and October as follows:
Actual: May 6,000 units
June 6,150 units
Forecast: July 6,070 units
August 6,790 units
September 5,500 units
October 5,290 units
Required -
a. The firm's policy is to have finished goods inventory on hand at the end of the month that is equal to 55% of the next month's sales. It is currently estimated that there will be 3,338 units on hand at the end of June. Calculate the number of units to be produced in each of the months of July, August, and September.
b. Each unit of finished product requires 6 pounds of raw materials. The firm's policy is to have raw material inventory on hand at the end of each month that is equal to 45% of the next month's estimated usage. It is currently estimated that 26,800 pounds of raw materials will be on hand at the end of June. Calculate the number of pounds of raw materials to be purchased in each of the months of July and August.
Required - Prepare a reconciliation of units and a computation of equivalent units for June for the Cleaning Department
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