Bodin Company budgets on an annual basis. The following beginning and ending inv

Question

Bodin Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are plannned for the year 20x1. Two units of raw material are required to produce each unit of finished product. January 1 December 31 Raw material Work in process Finished goods 35,000 12,000 80,000 45,000 12,000 50,000 Required: 1. If Bodin Company plans to sell 480,000 units during the year, compute the number of units the firm would have to manufacture during the year. 2. If 500,000 finished units were to be manufactured by Bodin Company during the year, determine the amount of raw material to be purchased 1. Required production in units 2. Raw material purchases in units

Explanation / Answer

1. Production (in units) required for the year:

2. Purchases of raw material (in units), assuming production of 500,000 finished units:

Sales for the year 480,000 Add: Desired ending finished-goods inventory on December 31 50,000 Deduct: Beginning finished-goods inventory on January 1 80,000 Required production during the year 450,000

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