Question: Ryan Manufacturing must budget a particular direct material very carefully because of its scarcity and its cost. One unit of this material is used to

Ryan Manufacturing must budget a particular direct material very carefully because of its scarcity and its cost. One unit of this material is used to produce one unit of finished product, and all direct material is added at the beginning of production. Beginning inventory data are as follows:

Direct materials ....1,200 units

Work in process .... 400 units

Finished goods .....2,000 units

The CEO developed a strategic plan to increase sales this period to 14,000 units. To protect against inventory shortages, she would like to double finished goods, work-in-process, and direct materials inventories.

REQUIRED

A. How many units must be completed to achieve these goals?

B. How many units must be placed into production to achieve these goals?

C. How many units of direct materials must be purchased to achieve these goals?

D. Assume that Ryan’s purchasing agent is certain that only 12,000 units of this material can be acquired next period. If the firm holds to its goal for ending inventories, how many units can be sold?

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