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Question - A sales budget is given below for one of the products manufactured by the OMI Co.:
January 25000 units
February 40000 units
March 65000 units
Aprils 45000 units
May 35000 units
June 30000 units
The inventory of finished goods at the end of each month must equal 20% of the next month's sales. However, on December 31, the finished goods inventory totaled only 4000 units.
Each unit of product requires three kilograms of specialized material. Since the production of this specialized material by OMI's suppliers is sometimes irregular, the company has a policy of maintaining an ending inventory at the end of each month equal to 30% of the next month's production needs. This requirement had been met on January 1 of the current year.
Required -
1. What is the quantity of material to be purchased in January?
2. What is the quantity of material to be purchased in March?
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