Question

Sartain 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) 22,000 72,000
Raw material (grams) 52,000 42,000


Each unit of finished goods requires 3 grams of raw material.


If the company plans to sell 570,000 units during the year, the number of units it would have to manufacture during the year would be:

570,000 units

518,000 units

642,000 units

620,000 units

Answer 1

Answer:

620,000 units

Explanation:

The computation of the number of units manufactured during the year is shown below:

= Sales units + ending finished goods inventory - beginning finished goods inventory

= 570,000 units + 72,000 units - 22,000 units

= 620,000 units

Simply we added the ending finished goods inventory and deduct the beginning finished goods inventory to the sales units so that the accurate amount can come