Question

The Casings Plant of Wyoming Machines makes plastics shells for the company's calculators. (Each calculator requires one shell) For each of the next two years, Wyoming expects to sell 660,000 calculators. The beginning finished goods inventory of shells at the Casings Plant is 80,000 units. However, the target ending finished goods inventory for each year is 20,000 units. Each unit (shell) requires 6 ounces of plastic. At the beginning of the year. 210,000 ounces of plastic are in inventory. Management has set a target to have plastic on hand equal to four months sales requirements. Sales and production take place evenly throughout the year Required: the total targeted production of the finished product for the coming year b. Compute the requlred amount of plastic to be purchased for the coming year. (Do not round interhediate calculations.) Answer is complete but not entirely correct. Total targeted production in units 600.000 b. Materials to be purchased in ounces 4.590 000

Answer 1

Materials to be purchased in ounces: 4,710,000

Targeted production in units	600000
Plastic (in ounces) required per unit	6
Plastic required for production	3600000
Add: Targeted ending inventory of plastic	1320000
[660000 x 6 ounces) x 4/12]
Total needed	4920000
Less: Beginning inventory	210000
Materials to be purchased in ounces	4710000