Budgeting Production and Direct-Material Purchases
Bodin Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are planned for the year 20xI. Two units of raw material are required to produce each unit of finished product.
| January 1 | December 31 |
Raw material | 35,000 | 45,000 |
Work in process | 12,000 | 12,000 |
Finished goods | 80,000 | 50,000 |
Required :
1. If Bodin Company plans to sell 480.000 units, during the year. compute the number of units the firm would have to manufacture during the year.
2. If 500.000 finished units were to be manufactured by Bodin Company during the year, determine the amount of raw material to he purchased.
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