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    Osage Inc. - Production and purchases budgets

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    Osage Inc.. has actual sales for June and July and forecast sales for August, September, October, and November as follows:

    Actual:
    June 4,150 units
    July 4,350 units
    Forecasted:
    August 4,200 units
    September 4,950 units
    October 3,900 units
    November 3,700 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 70% of the next month's sales. It is currently estimated that there will be 3,300 units on hand at the end of July. Calculate the number of units to be produced in each of the months of August, September, and October.

    August September October
    Production

    (b) Each unit of finished product requires 5 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 80% of the next month's estimated usage. It is currently estimated that 13,000 pounds of raw materials will be on hand at the end of July. Calculate the number of pounds of raw materials to be purchased in each of the months of August and September.

    August September
    Purchases

    © BrainMass Inc. brainmass.com June 4, 2020, 2:47 am ad1c9bdddf
    https://brainmass.com/business/accounting/osage-inc-production-and-purchases-budgets-480084

    Solution Summary

    Your tutorial is in Excel (attached). You can see the layout for solving problems like this. Click in cells to see how the figures were computed.

    $2.19

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