Item 8

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)	26,000	36,000
Raw material (grams)	56,000	46,000

Each unit of finished goods requires 2 grams of raw material. The company plans to sell 330,000 units during the year.

The number of units the company would have to manufacture during the year would be:

Multiple Choice

• 274,000 units
• 330,000 units
• 340,000 units
• 366,000 units

8b.

LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.3 hours of direct labor at the rate of $19.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.

The budgeted direct labor cost per unit of Product WZ would be:

Multiple Choice

• $20.10
• $19.00
• $5.60
• $43.70