Question

Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Beginning Inventory Ending Inventory Finished goods (units) 26,000 76,000 Raw material (grams) 56,000 46,000 Each unit of finished goods requires 2 grams of raw material. The company plans to sell 730,000 units during the year. The number of units the company would have to manufacture during the year would be

Answer 1

Answer:

The number of units the company would have to manufacture during the year would be 780,000 units

Explanation:

To find out how much purchase is made, first we have to calculate the production level. The equation for production level is shown below:

Production level = Closing stock of finished goods + Sales - Opening stock of finished goods

= 76,000 + 730,000 - 26,000

= 780,000 units

Rest cost like opening and ending balance of raw material , required gram is irrelevant for computation part. Thus, it is not considered.

Hence, The number of units the company would have to manufacture during the year would be 780,000 units