High School

Sunland Company required production for June is 132,000 units. To make one unit of finished product, three pounds of direct material Z are required. Actual beginning and desired ending inventories of direct material Z are 205,000 and 235,000 pounds, respectively.

How many pounds of direct material Z must be purchased?

A. 426,000
B. 408,000
C. 378,000
D. 396,000

Answer :

The correct option is: (A) The total materials needed for production and adjust for beginning and desired ending inventories giving 426,000 pounds.

  • Calculate the total materials needed for production:

Total materials needed = Required production units × Materials per unit

Total materials needed = 132,000 units × 3 pounds/unit

= 396,000 pounds

  • Adjust for inventory changes:

Total materials to be purchased = Total materials needed + Desired ending inventory - Beginning inventory

Total materials to be purchased = 396,000 pounds + 235,000 pounds - 205,000 pounds

= 426,000 pounds

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