Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Each unit of finished goods requires 2 grams of raw material. The company plans to sell 720,000 units during the year.The number of units the company would have to manufacture during the year would be:

Question

Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year.  Each unit of finished goods requires 2 grams of raw material. The company plans to sell 720,000 units during the year.The number of units the company would have to manufacture during the year would be:

Quizplus · Accepted Answer

To calculate the number of units the company would have to manufacture during the year, we need to first calculate the amount of raw material required. From the information given, the company plans to sell 720,000 units during the year. With each unit requiring 2 grams of raw material, the total amount of raw material required would be:

720,000 units x 2 grams per unit = 1,440,000 grams

To determine the number of units the company would have to manufacture during the year, we need to add the amount of raw material required to the beginning inventory level and subtract the ending inventory level:

Beginning inventory level + amount of raw material required - ending inventory level = units to manufacture

Using the information given, we can plug in the numbers and solve:

10,000 grams + 1,440,000 grams - 20,000 grams = 1,430,000 grams
1,430,000 grams / 2 grams per unit = 715,000 units manufactured
715,000 units + 55,000 unit increase in ending inventory = 770,000 units

Therefore, the company would have to manufacture 770,000 units during the year, making choice D the correct answer.

Sarafiny Corporation Is in the Process of Preparing Its Annual