Question

Sheridan Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels are planned for the fiscal year of July 1, 2021 to June 30, 2022: June 30, 2022 June 30, 2021 Raw Materials 3000 kilos 2000 kilos Three kilos of raw materials are needed to produce each unit of finished product. If Sheridan Company plans to produce 480000 units during the 2021-2022 fiscal year, how many kilos of materials will the company need to purchase for its production during the year?

Answer 1

The number of  kilos of materials that the company will need to purchase for its production during the year is: $1,441,000.

Number of  kilos of materials to purchase

Using this formula

Kilos of materials=(Units to produce×Number of kilos of raw materials)+Ending kilo of raw material-Beginning kilo of raw material

Let plug in the formula

Kilos of materials=(480000×3)+3,000-2,000

Kilos of materials=1,440,000+1,000

Kilos of materials=$1,441,000

Therefore the number of  kilos of materials that the company will need to purchase for its production during the year is: $1,441,000.

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