Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year.
Beginning Inventory Ending Inventory
Finished goods (units) 20,000 30,000
Raw material (grams) 50,000 40,000
Each unit of finished goods requires 7 grams of raw material.
a. If the company plans to sell 270,000 units during the year, compute the number of units it would have to manufacture during the year.
b. How much of the raw material should the company purchase during the year?