Question

Sarter Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Finished goods (units) Raw material (grams) Beginning Inventory 31,000 61,000 Ending Inventory 81,000 51,000 Each unit of finished goods requires 3 grams of raw material. If the company plans to sell 660.000 units during the year, the number of units it would have to manufacture during the year would be: O 660.000 units O 741,000 units 710,000 units O 599.000 units

Answer 1

The finished goods inventory required for the beginning is 31000 units and ending is 81000 units.

The company is planning to sell 660000 units during the year.

So the number of units it will have to manufacture considering the above sales units would be calculated as follows

Units to be manufactured= Sales+ ending inventory – beginning inventory

                                                =660000+81000-31000

                                               = 710000 units

So the correct answer would be 710000 units need to manufactured during the year for the company to sell 660000 units.