Question

Her System Announcements PRINTER VERSION BACK NE Exercise 23-7 x Your answer is incorrect. Try again. Rensing Ltd, estimates sales for the second quarter of 2017 will be as follows. Units Month April May June 2,520 2,440 2,390 The target ending inventory of finished products is as follows. March 31 April 30 May 31 June 30 2,010 2,280 2,170 2,330 2 units of material are required for each unit of finished product. Production for July is estimated at 2,750 units to start building inventory for the fall sales period. Rensing's policy is to have an inventory of raw materials at the end of each month equal to 50% of the following month's production requirements. Raw materials are expected to cost $7 per unit throughout the period. Calculate the May raw materials purchases in dollars. Raw material purchases cost Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT Question Attempts: 2 of 3 used SAVE FOR LATER SUBMIT ANSWER Show al GBS 221 Exam 3 R...doc 10:08 PM A.COM 0) I ENG 1 11/13/2019 earch o e Me 9

Answer 1

Calculation of budgeted production of units

Particulars	may	june
Estimated sales	2440	2390
Add ending target inventory	2170	2330
Less opening target inventory	(2280)	(2170)
Target production	2330	2550
* Raw material per unit	2	2
Raw material required for production	4660	5100

Since raw material inventory needs to be 50% of next month production requirement.

Ending raw material inventory of may = 50% of June's production

= 5100*50% = 2550

Beggining raw material inventory of may = 50% of may's production requirement

= 4660*50%

= 2330

Calculation of purchase Amount of may

Particular	amount
Production requirement of raw material	4660
Add closing inventory	2550
Less opening inventory	(2330)
Purchase units of raw material	4880
* Raw material rate	$7
Purchase amount	$34160

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