Question

Beginning Inventory Ending Inventory Raw material* 59,000 69,000 Finished goods 99,000 69,000 * Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 575,000 units during next year, the number of units it would have to manufacture during the year would be:

Answer 1

Paradise Corporation

The number of units it would have to manufacture during the year would be:

545,000 units

Step-by-step explanation:

a) Data and Calculations:

Beginning Inventory Ending Inventory

Raw material 59,000 69,000

Finished goods 99,000 69,000

Raw materials for one unit of finished product = 3 pounds

Budgeted Sales = 575,000 units

Units to be manufactured during the year =

Ending Inventory of finished goods 69,000 units

Units of goods to sale during period 575,000 units

Units available for sale 644,000 units

less Beginning Inventory of finished 99,000 units

Units to manufacture or produce 545,000 units

b) The units to manufacture is the difference between the Units available for sale (which is made up of ending inventory of finished goods (units) and the units of goods to be sold) minus the units at the beginning of the period.