Production estimates for July are as follows:

Estimated inventory (units), July 1 8,500
Desired inventory (units), July 31 10,500
Expected sales volume (units), July 76,000
For each unit produced, the direct materials requirements are as follows:

Direct material A ($5 per lb.) 3 lbs.
Direct material B ($18 per lb.) 1/2 lb.

The number of pounds of materials A and B required for July production is 216,000 lbs. of:

a. A; 36,000 lbs. of B
b. 216,000 lbs. of A;
c. 72,000 lbs. of B
d. 234,000 lbs. of A;
e. 39,000 lbs. of B
f. 225,000 lbs. of A;
g. 37,500 lbs. of B

d. 234,000 lbs. of A; e. 39,000 lbs. of B

Explanation:

For computing the number of pounds first we have to find out the production units which is shown below:

Production units = Sales units + ending inventory units - beginning inventory units

= 76,000 units + 10,500 units - 8,500 units

= 78,000 units

Now number of material pounds required is

Direct material            A          B  

One unit requires           3 lbs1 ÷ 2 lbs

Multiply 78000 unit requires   234,00039,000

We simply multiplied the production units with the required unit of each material i.e A and B so that the accurate number of pounds could arrive

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