The Sun Company manufactures a special line of graphic tubing items. The company

Question

The Sun Company manufactures a special line of graphic tubing items. The company estimates it will sell 67,000 units of this item in 2012. The beginning finished goods inventory contains 22,000 units. The target for each year's ending inventory is 11,000 units. Each unit requires 5 feet of plastic tubing. The tubing inventory currently includes 62,000 feet of the required tubing. Materials on hand are targeted to equal 3 months' production. Any shortage in materials will be made up by the immediate purchase of materials. Sales take place evenly throughout the year. What are the materials requirements (in feet) for 2012?

Explanation / Answer

The SUN Company Details Qty Unit Beginning Finished Goods Inventory              22,000 units Estimated sale in 2012              67,000 units Closing inventory Finished goods              11,000 units Required Producion of FG in 2012              56,000 units Production per month                4,667 units 3 month's production              14,000 units Opening tubing Inventory              62,000 ft Tubing required for production           280,000 ft Tubing required for 3 months production requirement in hand              70,000 ft Total Materials Requirement 2012           350,000 ft Purchase requirement in 2012           288,000 ft

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