Swifty Corporation budgets on an annual basis for its fiscal year. The following

Question

Swifty Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels are planned for the fiscal year of July 1, 2016 to June 30, 2017:

Three kilos of raw materials are needed to produce each unit of finished product. If Swifty Corporation plans to produce 540000 units during the 2016-2017 fiscal year, how many kilos of materials will the company need to purchase for its production during the year?

Explanation / Answer

A. 1,622,000

Kilos of materials the company will need to purchase for its production during the year:

= 4,000 + (540,000 * 3) - 2,000

= 1,622,000

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