Sarter Corporation is in the process of preparing its annual

Sarter Corporation is in the process of preparing its annual budget. The following beginning and ending nventory levels are planned for the year. 72,000 42,000 Finished goods (units) 52,000 Raw material (grams) Each unit of finished goods requires 3 grams of raw material. The company plans to sell 570,000 units during the year, how much of the raw material should the company purchase during the year? O 1,902.000 grams O 1,860,000 grams O 1,872,000 grams O 1850,000 grams

Solution

Raw Material Should company purchase: 1,850,000 grams

Working as below

Sales Units during the year	570,000
Add: Closing Finished Goods	72,000
Less: Opening Finished Goods	22,000
Finished Goods production required during the year	620,000
Raw material required per finished goods ( in grams)	3
Total Raw material required in grams	1,860,000
Add: Closing raw material stock	42,000
Less: Opening raw material stock	52,000
Raw Material needs to purchase in grams	1,850,000