Question

Direct material budget. Dawson Co. produces wine. The company expects to produce 2,535,000 two-liter bottles of Chablis in 2018. Dawson purchases empty glass bottles from an outside vendor. Its target ending inventory of such bottles is 77,000; its beginning inventory is 54,000. For simplicity, ignore breakage. Compute the number of bottles to be purchased in 2018.

Answer 1

2,558,000 bottles

Step-by-step explanation:

The formula for computation of the purchase is:

Purchase in units = Usage + Desired ending material inventory units − Beginning inventory units.

In format that will be:

Beginning inventory 54,000

Plus: Purchases.........2,558,000

Less:ending inventory 77,000

Required For Use......2,535,000

Hence the number of bottles to be purchased in 2018 is 2,558,000