Sarafiny Corporation Is in the Process of Preparing Its Annual

question 234

Multiple Choice

Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year.
Each unit of finished goods requires 7 grams of raw material. The company plans to sell 270,000 units during the year
-How much of the raw material should the company purchase during the year?

• A) 1,960,000 grams
• B) 1,950,000 grams
• C) 1,970,000 grams
• D) 2,000,000 grams

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Definitions:

Diminishing Marginal Utility

The principle stating that as more of a good or service is consumed, the marginal benefit of additional units will decline.

Utility Maximization

The process by which consumers adjust their consumption to achieve the highest level of satisfaction from their available resources.

Marginal Utility

The incremental pleasure or advantage obtained by consuming an extra unit of a good or service.

Price Ratio

The ratio or comparison between the prices of two different goods or services.