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) 27,000 77,000 Raw material (grams) 57,000 47,000 Each unit of finished goods requires 3 grams of raw material. The company plans to sell 740,000 units during the year. The number of units the company would have to manufacture during the year would be:

Answer 1

790,000

Step-by-step explanation:

Data provided

Budgeted sales = 740,000

Desired ending inventory = 77,000

Beginning inventory = 27,000

The computation of number of units is shown below:-

Number of units to be manufactured = Budgeted sales + Desired ending inventory - Beginning inventory

= 740,000 + 77,000 - 27,000

= 817,000 - 27,000

= 790,000

Therefore for computing the number of units manufactured we simply applied the above formula.