Question: Alder Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are planned for the next year. Three units of raw material are required to produce each unit of finished product.
| January 1 |
December 31 |
| Raw material |
36,000 |
47,000 |
|
| Work in process |
13,000 |
13,000 |
|
| Finished goods |
96,000 |
75,000 |
|
1. If Alder Company plans to sell 456,000 units during the year, compute the number of units the firm would have to manufacture during the year.
2. If 508,000 finished units were to be manufactured by Adler Company during the year, determine the amount of raw material to be purchased.