Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year: Beginning Inventory Ending Inventory
Finished goods (units) 27,000 77,000
Raw material (grams) 57,000 47,000

Each unit of finished goods requires 3 grams of raw material. If the company plans to sell 140,000 units during the year, how much of the raw material should the company purchase during the year?

560,000

Explanation:

The computation of the raw material purchased during the year is as follows:

Before that following calculations need to be done

Change in inventory = Ending Inventory - Begining Inventory

= 77,000 - 27,000

= 50,000

Now  total units produced is

= Units sold + Increase in Inventory

= 140,000 + 50,000

= 190,000

To produce 190,000 units of finished goods the raw material needed is

= 3 grams ×  190,000

= 570,000 grams  

Now

Change in raw material = Ending raw material - Begining raw material

= 47,000 - 57,000

= -10,000

So,

Purchase of raw material = Raw material requirement - Decrease in raw material

= 570,000 - 10,000

= 560,000

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a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.