Use the following information to answer the next two questions:
The Hamblen Company has budgeted production for the next five quarters as follows:
Quarter
2004 2004 2004 2004 2005
First Second Third Fourth First
Production in units... 10,000 12,000 16,000 14,000 11,000
Four pounds of raw materials are required for each unit produced. Raw materials on hand at the
start of the year totals 4,000 lbs. The raw materials inventory at the end of each quarter should
equal 10% of the next quarter's raw material needs.
3. Budgeted purchases of raw materials in the third quarter would be:
a. 50,400 lbs.
b. 56,800 lbs.
c. 62,400 lbs.
d. 63,200lbs.
4. The raw materials inventory at the end of 2004 is expected to be:
a. 4,400
b. 4,800
c. 5,600
d. 6,400