Sarter Corporation is in the process of preparing its annual budget. The followi
ID: 2424046 • Letter: S
Question
Sarter Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year.
If the company plans to sell 580,000 units during the year, the number of units it would have to manufacture during the year would be:
a) 580,000 units
b) 630,000 units
c) 653,000 units
d) 527,000 units
Sarter Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year.
Explanation / Answer
The answer is option b) based on the following calculations.
Details
Units
Beginning finished goods inventory
23,000 units
Add: Units manufactured during the year
X units
No. of units available for sale
23000+X units
Less: Ending finished goods inventory
73,000 units
Number of units to be sold
580,000 units
Calculation of number of units manufactured:
23,000 units + X units – 73,000 units = 580,000 units
-50,000 units + X units = 580,000 units
X = 580,000 units + 50,000 units
X = 630,000 units
Therefore, number of units to be manufactured during the year is 630,000 units.
Details
Units
Beginning finished goods inventory
23,000 units
Add: Units manufactured during the year
X units
No. of units available for sale
23000+X units
Less: Ending finished goods inventory
73,000 units
Number of units to be sold
580,000 units
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