Question

Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year.

Beginning Inventory Ending Inventory
Raw material* 62,200 56,600
Finished goods 91,800 66,200

* Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 531,000 units during next year, the number of units it would have to manufacture during the year would be:

a. 505,400 units
b. 565,400 units
c. 495,400 units
d. 535,400 units

Answer 1

Option (a) : 505,400 units

Step-by-step explanation:

As per the data given in the question,

Budget sale units = 531,000

Ending inventory of finished goods = 66,200

Beginning inventory of finished goods = 91,800

Budgeted production unit = 531,000 + 66200 - 91,800

= 505,400

So, The number of units it would have to manufacture during the year is 505,400 units.

Hence, option (a) is correct answer.