Use the following information for the next 2 questions.
Matz 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. Matz has 100,000 units of direct material on hand and has budgeted for an ending inventory of 110,000 units.
-What is the amount of direct material to be purchased (in units)?
A) 38,000
B) 46,000
C) 66,000
D) 18,000

Question

Quizplus · Accepted Answer

To calculate the direct material to be purchased:  1. Calculate the total units to be produced: Desired ending inventory (14,000) + Expected sales (24,000) - Beginning inventory (10,000) = 28,000 units.  2. Calculate the total direct materials needed: 28,000 units * 2 = 56,000 units.  3. Calculate the direct materials to be purchased: Desired ending inventory (110,000) + Direct materials needed (56,000) - Beginning inventory (100,000) = 66,000 units.

Use the Following Information for the Next 2 Questions