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 7 grams of raw material. The company plans to sell 270,000 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 7 grams of raw material. The company plans to sell 270,000 units during the year.The number of units the company would have to manufacture during the year would be:

Quizplus · Accepted Answer

To determine the number of units the company would have to manufacture during the year, we need to calculate the total units needed to meet the demand and adjust for beginning and ending finished goods inventory levels.

Total units needed = units to be sold + ending inventory - beginning inventory
Total units needed = 270,000 + 12,000 - 8,000
Total units needed = 274,000

Now, since each unit of finished goods requires 7 grams of raw material, we need to multiply the total units needed by 7 to get the total grams of raw material needed.

Total grams of raw material needed = 274,000 units x 7 grams/unit
Total grams of raw material needed = 1,918,000 grams

Therefore, the company would have to manufacture 280,000 units (which requires 1,960,000 grams of raw material) during the year to meet the demand and adjust for inventory levels. The best choice is D) 280,000 units.

Sarafiny Corporation Is in the Process of Preparing Its Annual