Question

Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year. Beginning Inventory Ending Inventory Raw material* 52,000 62,000 Finished goods 92,000 62,000 * Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 540,000 units during next year, the number of units it would have to manufacture during the year would be:

Answer 1

Answer:

510,000 units

Explanation:

Note: The data in the questions are merged together and they are first separated before answering the question as follows:

                                  Beginning Inventory        Ending Inventory

Raw material                      52,000                            62,000

Finished goods                  92,000                           62,000

The explanation to the answer is as follows:

Beginning inventory of finished goods + Units of finished goods manufactured = Ending inventory of finished goods  + Units of finished goods sold

Units of finished goods manufactured = Ending inventory of finished goods  + Units of finished goods sold  - Beginning inventory of finished goods

Therefore, we have:

Units of finished goods manufactured = 62,000 + 540,000 - 92,000 = 510,000