Task:
David company expects to sell 25,000 units.
Each unit requires:
5 pounds of direct material at $10 per pound
2 direct labor hours at $12 per direct labor hour
The manufacturing overhead rate is $8 per direct labor hour.
The beginning inventories are as follows:
Direct materials: 5,000 pounds
Finished goods: 3,500 units
The planned ending inventories are as follows:
Direct materials: 6,000 pounds
Finished goods: 2,500 units
Required:
1. What is the planned production?
2. What are the required direct material purchases for the planned production?