Smith company expects to sell 5,000 units.
Each unit requires:
2 pounds of direct material at
$10 per pound
2 direct labor hours at $12 per direct labor hour
The manufacturing overhead rate is $7 per direct labor hour.
The beginning inventories are as follows:
Direct materials: 1,000 pounds
Finished goods: 2,500 units
The planned ending inventories are as follows:
Direct materials: 2,000 pounds
Finished goods: 1,500 units
1. What is the planned production?
2. What are the required direct material purchases for the planned production?