Question

The Bridget Company has budgeted sales for 100,000 units of its product for next year. Assume...

The Bridget Company has budgeted sales for 100,000 units of its product for next year.

Assume Bridget begins the year with 40,000 units of finished product, but budgets ending inventory to be only 10,000 finished units.

a. Compute the total budgeted units of production required for next year.

b. If each unit takes three pounds of raw materials to make, and we now have 5,000 pounds of raw material on hand but want to end with 8,000 pounds, how many pounds of raw material do we need to purchase next year?

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Homework Answers

Answer #1

a. Closing Finished Goods = Opening  Finished Goods + Units Produced - Units Sold

10,000 = 40,000 +Units Produced - 100,000

or Units Produced = 100,000 +10,000-40,000

= 70,000 Units

Hence the correct answer is 70,000 Units

b. Total Raw Materials required = Units Produced * 3 pounds

= 70,000 Units * 3 Pounds

Ending Raw Material = Beginning Raw Material + Purchased Raw Material - Raw Material Used

8,000 = 5,000 + Purchased Raw Material - 210,000

or Purchased Raw Material = 210,000 + 8,000 -5,000

= 213,000 pounds

Hence the correct answer is 213,000 pounds

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