Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Beginning Inventory Ending Inventory Finished goods (units) 20,000 30,000 Raw material (grams) 50,000 40,000 Each unit of finished goods requires 7 grams of raw material. The company plans to sell 270,000 units during the year. How much of the raw material should the company purchase during the year

1,950,000 grams

Explanation:

The computation of the material should be purchased is given below:

Raw materials purchased is

= Ending inventory of raw materials + Materials to be used - Beginning Inventory of raw materials

where,

Raw materials to be used = units produced × 7  grams

Units produced is

= Ending inventory of finished goods + units sold - beginning inventory of finished goods

= 30,000 units + 270,000 units - 20,000 units

= 280,000

Now raw materials used is

= 280,000 × 7 grams

= 1,960,000 grams

Now

Materials purchased = Ending inventory of raw materials + Materials to be used - Beginning Inventory of raw materials

= 40,000 grams + 1,960,000 grams - 50,000 grams

= 1,950,000 grams

explanation:

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