[marissaann]

I'm working on some practice problems and I'm not sure exactly how to do them... here's what I've come up w/, but I don't know if I'm on the right track:

Problem 1: Paradise Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year.
Beginning Inventory Ending Inventory
Raw Materials 40,000 50,000
*Three pounds of raw materials are needed to produce each unit of finished product*
Finished Goods 80,000 50,000
If Paradise Co. plans to sell 480,000 units during next year, the number of units it would have to manufacture during the year would be:

*My thinking on this is that you would multiply the units in both finished goods columns by the three punds of raw materials needed. Which would give me 300,000. But that doesn't seem right.

[CaptainForest]

Beg. Inv + Manufactured Goods = Goods Available For Sale – Ending Inv = COGS
80,000 + Manufactured Goods = Goods Available For Sale – 50,000 = 480,000

Goods Available For Sale = 480,000 + 50,000 = 530,000

Manufactured Goods = Goods Available For Sale – 80,000 = 530,000-80,000 = 450,000

Therefore, you will need to manufacture 450,000 units in the year.

The raw material information for this question is irrelevant since all you are being asked is the total number of finished units to be produced.