Alder Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are planned for the next year. Two units of raw materials are required to produce each unit of finished product.
- January 1 December 31
- Raw material 245,000 315,000
- Work in process 84,000 84,000
- Finished goods 560,000 350,000
Required:
1) If Alder Company plans to sell 3,360,000 units during the year, compute the number of units the firm would have to manufacture during the year.
2) If 3,500,000 finished units were to be manufactured by Alder Company during the year, determine the amount of raw material to be purchased.