A company’s production budget requires the following units of a single product for the upcoming year: 1st quarter 60,000 units 2nd quarter 80,000 units 3rd quarter 90,000 units 4th quarter 70,000 units Each unit requires two pounds of material. The company has a policy of keeping a stock of material on hand at the end of each quarter equal to 25% of the next quarter's production needs for material. A total of 30,000 pounds of material are on hand to start the year. Budgeted purchases of material for the second quarter would be:

165,000 pounds

Explanation:

A Purchase Budget is required to determine the quantities and cost of purchases required for use in production.

Materials Purchase Budget for Second Quarter (Pounds)

Budgeted Production Materials (80,000 x 2)                    160,000

Add Budgeted Closing Materials (90,000 x 2 x 25%)        45,000

Total Materials                                                                     205,000

Less Budgeted Opening Materials (80,000 x 2 x 25%)    (40,000)

Budgeted Material Purchase (pounds)                               165,000

Therefore,

Budgeted purchases of material for the second quarter would be 165,000 pounds

its simple as this, microeconomics is the study of economics at an individual, group or company level, macroeconomics on the other hand, is the study of a national economy as a whole.

hope it =^-^=