Calculate the number of pounds of raw materials

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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 - 5,900 units

June - 6,240 units

Forecast:

July - 5,950 units

August - 6,820 units

September - 5,530 units

October - 5,260 units

a) The firm's policy is to have finished goods inventory on hand at the end of the month that is equal to 70% of the next month's sales. It is currently estimated that there will be 4,165 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 5 pounds raw materials. The firm's policy is to have raw material inventory on hand at the end of each month that is equal to 60% of next month's estimated usage. It is currently estimated that 26,500 pounds of raw material 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.

Reference no: EM132999007

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