Marst Corporation's budgeted production in units and budgeted raw materials purchases over the next three months are given below: January February March Budgeted production (in units) 70,900 ? 84,500 Budgeted raw materials purchases (in pounds) 197,769 165,100 163,300 Three pounds of raw materials are required to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 21% of the following month's production needs. The company is expected to have 44,667 pounds of raw materials on hand on January 1. Budgeted production for February should be:

Budgeted production for February should be 212700 Pounds.

Explanation:

Marst Corporation

                                   January             February            March

Budgeted production (in units) 70,900    ?                    84,500

Budgeted raw materials purchases (in pounds) 197,769 165,100 163,300

As each month ending inventory is  equal to 21% of the following month's production needs therefore

21% of Feb Production= Jan Ending Inventory 44,667 pounds

Rearranging

February Production= 44,667/21%

February Production= (44,667/21 )*100

February Production= 2127 *100= 212700 Pounds.

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