Prestwich Company has budgeted production for next year as follows: Quarter First Second Third Fourth Production in units 60,000 80,000 90,000 70,000 Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 30,000 pounds of material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be: A. 82,500 pounds B. 200,000 pounds 205,000 pounds D. 165,000 pounds

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Prestwich Company has budgeted production for next year as follows:
Quarter
First
Second
Third
Fourth
Production in units...
60,000
80,000
90,000
70,000
........
Two pounds of material A are required for each unit produced. The company has a policy
of maintaining a stock of material A on hand at the end of each quarter equal to 25% of
the next quarter's production needs for material A. A total of 30,000 pounds of material A
are on hand to start the year. Budgeted purchases of material A for the second quarter
would be:
A. 82,500 pounds
B. 200,000 pounds
C. 205,000 pounds
D. 165,000 pounds
Transcribed Image Text:Prestwich Company has budgeted production for next year as follows: Quarter First Second Third Fourth Production in units... 60,000 80,000 90,000 70,000 ........ Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 30,000 pounds of material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be: A. 82,500 pounds B. 200,000 pounds C. 205,000 pounds D. 165,000 pounds
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