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RS is currently preparing the production budget for Product A and the material purchase budget for material X for the forthcoming year. Each unit of Product A requires 5 kgs of material X. The anticipated opening inventory for Product A is 5,000 units and the company wishes to increase the closing inventory by 30% by the end of the year.
The anticipated opening inventory for material X is 50,000 kgs and in order to avoid stock outs the required closing inventory has been increased to 60,000 kgs.
Problem 1: The Sales Director has confirmed a sales requirement of 70,000 units of Product A. What will be the purchases budget for material X?
Option 1: 347,500 kgs
Option 2: 350,000 kgs
Option 3: 357,500 kgs
Option 4: 367,500 kgs
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