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A company manufacturing two products,x and y from the same direct material. A equal number of each product will be produced this period. Each unit of x requires 2 kg of material and each unit of y requires 3 kg of material. The company always holds closing inventory of raw material sufficient for 40% of the next periods production . The budgeted closing raw material inventory for the previous period is 900 kg. What is the budgeted production of x for the current period?
In future please do not simply type out full questions and expect to be provided with a full answer. You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain.
The 900kg at the end of the last period is 40% of the material they will use in this period. Therefore in this period they will be using 900/40% = 2,250 kg.
Making 1 units of each product uses in total 5kg and so using 2,250 kg will mean that they will produce 2,250/5 units of each of the products.
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