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 number of finished units to be produced?
A)38,000
B)28,000
C)20,000
D)24,000

Question

Quizplus · Accepted Answer

To determine the number of finished units to be produced, we need to calculate the total units needed (including the desired ending inventory) and subtract the beginning inventory.

Total units needed = expected sales + desired ending inventory = 24,000 + 14,000 = 38,000 units

Units already on hand = 10,000 units

So, the number of finished units to be produced = Total units needed - Units already on hand = 38,000 - 10,000 = 28,000 units

Therefore, the correct answer is choice B, 28,000.

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