Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Beginning Inventory Ending Inventory Finished goods (units) 19,000 69,000 Raw material (grams) 49,000 39,000 Each unit of finished goods requires 3 grams of raw material. The company plans to sell 540,000 units during the year. How much of the raw material should the company purchase during the year?

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andromache andromache · Answer 1 · 2019-12-12T07:54:16+01:00

Answer:

1,760,000 gram

Explanation:

For computing the purchase of raw material, first we have to determine the required production which is shown below:

= Sale units + ending finished inventory units - beginning finished inventory units

= 540,000 units + 69,000 units - 19,000 units

= 590,000 units

The 3 gram is required, so the production would be

= 590,000 units × 3 gram

= 1,770,000 gram

Now the purchase of material would be

= Required production + ending raw material inventory units - beginning raw material inventory units

= 1,770,000 gram + 39,000 gram - 49,000 gram

= 1,760,000 gram