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

Sarafiny Corporation will need to manufacture 780,000 units during the year to meet the projected sales and desired ending inventory levels after accounting for the existing beginning inventory of finished goods.

Step-by-step explanation:

To calculate the number of units that Sarafiny Corporation must manufacture during the year, we use the following information: the beginning and ending inventory levels of finished goods, the annual sales units, and the raw material required per unit of finished good.

First, we calculate the total number of finished goods that will be needed for the year. This includes the number of units to be sold and the desired ending inventory, minus the beginning inventory of finished goods.

Total units needed = Units to be sold + Desired ending inventory - Beginning inventory

Inserting the given values:

Total units needed = 730,000 units (to be sold) + 76,000 units (desired ending inventory) - 26,000 units (beginning inventory) = 780,000 units

Therefore, Sarafiny Corporation will have to manufacture 780,000 units during the year to meet its sales and inventory targets.

Answer 2

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

Step-by-step 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