Question - Alder Company budgets annually. The following beginning and ending inventory levels are planned for the next year. Two units of raw material are required to produce each unit of finished product.
Raw Material: 245,000 Jan 1 and 315,000 on Dec 31
Work in process: 84,000 Jan 1 and 84,000 on Dec 31
Finished goods: 560,000 Jan 1 and 350,000 on Dec 31
1. If they plan to sell 3,360,000 units during the year, compute number of units the firm would have to manufacture during the year.
2. If 3,500,000 finished units were made, determine amount of raw materials to be purchased.