The Casings Plant of Wyoming Machines makes plastics shells for the company\'s c
ID: 2584559 • Letter: T
Question
The Casings Plant of Wyoming Machines makes plastics shells for the company's calculators. (Each calculator requires one shell.) For each of the next two years, Wyoming expects to sell 600,000 calculators. The beginning finished goods inventory of shells at the Casings Plant is 80,000 units. However, the target ending finished goods inventory for each year is 20,000 units. Each unit (shell) requires 6 ounces of plastic. At the beginning of the year, 260,000 ounces of plastic are in inventory. Management has set a target to have plastic on hand equal to four months' sales requirements. Sales and production take place evenly throughout the year. Required a. Compute the total targeted production of the finished product for the coming year. Total targeted production in units b. Compute the required amount of plastic to be purchased for the coming year. (Do not round intermediate calculations.) Materials to be purchased in ouncesExplanation / Answer
a) Calculate target production in units :
Production in units = Sales in units+Desired ending inventory-Beginning inventory
= 600000+20000-80000
Production in units = 540000 units
b) material to be purchased in ounces :
Required material purchase = Raw material needs in production +ending inventory of raw material-beginning inventory of raw material
= (540000*6)+(600000*6*4/12)-260000
Required material purchase = 4180000 ounces