mba642exercise 9-24 #2

# mba642exercise 9-24 #2 - of raw material to be purchased...

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Exercise 9-24, #2 only Data: Alder Company budgets on 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 unit of finished product. Jan. 1 Dec. 31 Raw material 245,000 315,000 Work in process 84,000 84,000 Finished goods 560,000 350,000 Question: If 3,500,000 finished units were to be manufactured by Alder Company during the year, determine the amount
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Unformatted text preview: of raw material to be purchased. Calculation: Answer: Raw materials required for production = 3,500,000 x 2 = 7,000,000 Add: desired ending raw material inventory on Dec. 31 = 315,000 Deduct: beginning raw material inventory on Jan. 1 = 245,000 Required raw material purchase during the year = 7,000,000 + 315,000- 245,000 = 7,070,000...
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## This note was uploaded on 11/13/2011 for the course MBA 642 taught by Professor Jamesstephens during the Summer '11 term at Bellevue.

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