Hester Company budgets on an annual basis for its fiscal year. The following beg
ID: 2447378 • Letter: H
Question
Hester Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1, 20x2, through June 30, 20x3.
July 1, 20x2 June 30, 20x3
Raw material (note) 40,000 10,000
Work in process 8,000 8,000
Finished goods 30,000 5,000
(note) Three units of raw material are needed to produce each unit of finished product.
If Hester Company plans to sell 500,000 units during the 20x2-20x3 fiscal year, the number of units it would have to manufacture during the year would be
Explanation / Answer
Finished goods required to be manufactured closing stock 5000 Add Budgeted Sales 500000 Add closing WIP 8000 Less : opening stock 30000 Less : opening WIP 8000 Finished goods required to be manufactured 475000