Alder Company budgets on an annual basis. The following beginning and ending inv

Question

Alder Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are planned for the next year. Two units of raw material are required to produce each unit of finished product.

If Alder Company plans to sell 474,000 units during the year, compute the number of units the firm would have to manufacture during the year.

If 504,000 finished units were to be manufactured by Adler Company during the year, determine the amount of raw material to be purchased.

Alder Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are planned for the next year. Two units of raw material are required to produce each unit of finished product.

Explanation / Answer

Ending Finished Goods           50,000 Sell of Goods        474,000 Total Goods available        524,000 Less:Beginning FG         -94,000 Goods manufactured during the year        430,000 Production Units        504,000 Raw material req per unit of FG 2 Total Raw Material Req     1,008,000 Increase in RM Stock             6,000 Total Raw Material Purchased     1,014,000

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