Alder Company budgets on an annual basis. The following beginning and ending inv
ID: 2482335 • Letter: A
Question
Alder Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are planned for the next year. Five units of raw material are required to produce each unit of finished product.
If Alder Company plans to sell 466,000 units during the year, compute the number of units the firm would have to manufacture during the year.
If 503,000 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. Five units of raw material are required to produce each unit of finished product.
Explanation / Answer
Solution:
1)
Expected Sales Unit
466,000
Add: Finished Goods Inventory Dec 31
72,000
Less: Finished Goods Beginning Inventory Jan 1
87,000
Production Units
451,000
The number of units the firm would have to manufacture during the year = 451,000 Units
2)
Units
Expected Production of Finished units
503,000
Raw Material required per unit
5 Unit
Total Raw Material required to make 503,000 finished units
2,515,000
Add: Ending Work in process Dec 31
12,000
Less: Work In process Jan 1
12,000
Expected Raw material Consumption during the year
2,515,000
Add: Ending Raw Material Inventory Dec 31,
52,000
Less: Beginning Raw Material Inventory Jan 1
39,000
The amount of units of raw material to be purchased
2,528,000 Units
Expected Sales Unit
466,000
Add: Finished Goods Inventory Dec 31
72,000
Less: Finished Goods Beginning Inventory Jan 1
87,000
Production Units
451,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.