Ajax Manufacturing produces a single product, which takes 8.0 pounds of direct material per unit produced. The company's policy is to maintain an end-of- quarter inventory of materials equal to 25 percent of the following quarter's material requirements for production. Assume it is currently end of the first quarter of the new year, and that at the end of the prior 4th quarter, there were 16,000 pounds of material on hand. Required: a. How many units of product were planned for production in the first quarter? b. Under the assumption that production will increase by 10% in the second quarter, what are the direct material requirements (in pounds) for planned production in the second quarter?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Ajax Manufacturing produces a single product, which
takes 8.0 pounds of direct material per unit produced.
The company's policy is to maintain an end-of-
quarter inventory of materials equal to 25 percent of
the following quarter's material requirements for
production. Assume it is currently end of the first
quarter of the new year, and that at the end of the
prior 4th quarter, there were 16,000 pounds of
material on hand.
Required:
a. How many units of product were planned for
production in the first quarter?
b. Under the assumption that production will increase
by 10% in the second quarter, what are the direct
material requirements (in pounds) for planned
production in the second quarter?
Transcribed Image Text:Ajax Manufacturing produces a single product, which takes 8.0 pounds of direct material per unit produced. The company's policy is to maintain an end-of- quarter inventory of materials equal to 25 percent of the following quarter's material requirements for production. Assume it is currently end of the first quarter of the new year, and that at the end of the prior 4th quarter, there were 16,000 pounds of material on hand. Required: a. How many units of product were planned for production in the first quarter? b. Under the assumption that production will increase by 10% in the second quarter, what are the direct material requirements (in pounds) for planned production in the second quarter?
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