Question 1 Sarafiny Corporation is in the process of preparing its annual budget

Question

Question 1

Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year.

Each unit of finished goods requires 7 grams of raw material. The company plans to sell 270,000 units during the year

How much of the raw material should the company purchase during the year?

1,960,000 grams

1,950,000 grams

1,970,000 grams

2,000,000 grams

Beginning Inventory Ending Inventory Finished goods (units) 20,000 30,000 Raw material (grams) 50,000 40,000

Explanation / Answer

Units to be produced=270000-20000+30000= 280000 Raw materials to be purchased during the year=(280000*7)-50000+40000= 1950000 grams Option 2 is correct

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