Hesterman Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit $118
Budgeted unit sales (all on credit):
April 7,800
May 9,400
June 14,000
July 12,100
Raw materials requirement per unit of output 3 pounds
Raw materials cost $3.00 per pound
Direct labor requirement per unit of output 2.8 direct labor-hours
Direct labor wage rate $25.00 per direct labor-hour
Credit sales are collected:
40% in the month of the sale
60% in the following month
The ending finished goods inventory should equal 40% of the following month's sales. The ending raw materials inventory should equal 20% of the following month’s raw materials production needs. The budgeted required production for May is closest to:.
a. 9,400 units.
b. 18,760 units.
c. 11,240 units.
d. 15,000 units.

Production= 11,240 units

Explanation:

Giving the following information:

Budgeted unit sales (all on credit):

May 9,400

June 14,000

The ending finished goods inventory should equal 40% of the following month's sales.

To calculate the production required for May, we need to use the following formula:

Production= sales + desired ending inventory - beginning inventory

Production= 9,400 + (14,000*0.4) - (9,400*0.4)

Production= 11,240 units

the correct answer is:

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