Determing production and direct material purchases

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Reference no: EM1348665

Alder Company budgets an annual basis. The following beginning and ending inventory levels (in units) are planned for the next year. Two units of raw material are required to produce each of finished products.

January 1 December 31
Raw material 245,000 315,000
Work in process 84,000 84,000
Finished goods 560,000 350,000

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 Adler Company during the year, determine the amount of raw material to be purchased.

Reference no: EM1348665

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