Figure 1
Projected sales for Sommers, Inc., for next year and beginning and ending inventory data are as follows:
The selling price is £40 per unit. Each unit requires four pounds of material which costs £6 per pound. The beginning inventory of raw materials is 12,000 pounds. The company wants to have 3,000 pounds of material in inventory at the end of the year.
-Refer to Figure 1. How many pounds of material would Sommers need to purchase?

Question

Quizplus · Accepted Answer

To calculate the pounds of material needed to purchase, first determine the total material required for production, then adjust for beginning and ending inventory. Total material required = (Projected sales units * 4 pounds/unit) + Ending inventory - Beginning inventory.

Figure 1 Projected Sales for Sommers, Inc., for Next Year and Beginning