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) 23,000 33,000 Raw material (grams) 53,000 43,000 Each unit of finished goods requires 2 grams of raw material. The company plans to sell 180,000 units during the year. The number of units the company would have to manufacture during the year would be: a) 213,000 units b) 190,000 units c) 180,000 units d) 127,000 units

Answer 1

Answer: b) 190000 units

Explanation:

Budgeted production is the number of units of products that must br manufactured. It is calculates by combining the sales forecast with the ending inventory of the finished goods and subtracting the beginning inventory of finished goods.

That is, budgeted production = budgeted sales

+ ending inventory (finished goods)

- beginning inventory (finished goods)

= 180000 + 33000 - 23000

= 190,000 units