Question

Northern Illinois Company expects to sell 36,000 units of finished goods over the next 6-month period. The company has 12,000 finished units on hand and its managers want to have 14,000 units on hand at the end of the period. To produce one unit of finished product, two pounds of direct materials are needed. Northern Illinois has 80,000 pounds of direct material on hand and has budgeted for an ending inventory of 120,000 pounds of direct material. What is the number of finished units to be produced

Answer 1

38,000 units

Step-by-step explanation:

Total production required = Forecasted unit sales + Planned finished goods inventory balance = 36,000 + 14,000 = 50,000 units

Products to be manufactured = Total production required - Beginning finished goods inventory = 50,000 - 12,000 = 38,000 units

The number of finished units to be produced = 38,000 units

So the correct answer will be 38,000