Ritz Company expects to sell 24,000 units of finished goods over the next 6-month period. The company has 10,000 units on hand and its managers want to have 14,000 units on hand at the end of the period. To produce one unit of finished product, two units of direct materials are needed. Ritz has 100,000 units of direct material on hand and has budgeted for an ending inventory of 110,000 units.
What is the number of finished units to be produced?

Question

Quizplus · Accepted Answer

To find the number of finished units to be produced, we need to use a production budget formula:
Expected sales + Ending inventory - Beginning inventory = Units to be produced
Plugging in the given numbers:
24,000 units + 14,000 units - 10,000 units = 28,000 units

Therefore, the answer is B) 28,000.

Ritz Company Expects to Sell 24,000 Units of Finished Goods