A company expects to begin the coming year with 6000 units of Product DD in finished goods inventory. It expects to sell 85 000 units of the product and end the year with 8000 units in finished goods inventory. Each unit of product DD requires 4kgs of Material X. The company expects to have 4000 kg of Material X on hand at the beginning of the coming year and wishes to end the year with 6000 kg in inventory. How many kilograms of Material X must the company purchase during the year?
A) 250 000
B) 400 000
C) 300 000
D) 350 000

Question

Quizplus · Accepted Answer

The company needs to produce 87,000 units (85,000 sold + 8,000 ending inventory - 6,000 beginning inventory). Each unit requires 4 kg of Material X, so 348,000 kg are needed for production. Adding the desired ending inventory of 6,000 kg and subtracting the beginning inventory of 4,000 kg, the company must purchase 350,000 kg of Material X.

A Company Expects to Begin the Coming Year with 6000