Sartain Corporation is in the process of preparing its annual budget. The follow

ID: 2654657 • Letter: S

Question

Sartain 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 740,000 units during the year, how much of the raw material should the company purchase during the year?

2,417,000 grams

2,387,000 grams

2,370,000 grams

2,360,000 grams

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

Change in inventory = Ending Inventory - Begining Inventory

= 77,000 - 27,000

= 50,000

Therefore total units produced = Units sold + Increase in Inventory

= 740,000 + 50,000

= 790,000

To produce 790,000 units of finished goods the raw material requirement = 3 grams * 790,000

= 2,370,000 grams

Change in raw material = Ending raw material - Begining raw material

= 47,000 - 57,000

= -10,000

Purchase of raw material = Raw material requirement - Decrease in raw material

= 2,370,000 - 10,000

= 2,360,000

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