Question

Exercise 23-7 Your answer is incorrect. Try again. Rensing Ltd. estimates sales for the second quarter of 2017 will be as follows. Month Units 2,580 April Мay 2,400 June 2,330 The target ending inventory of finished products is as follows. March 31 2,020 2,200 April 30 May 31 June 30 2,130 2,330 2 units of material are required for each unit of finished product. Production for July is estimated at 2,660 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 $6 per unit throughout the period. Calculate the May raw materials purchases in dollars. Raw material purchases cost

Answer 1

April May   ​​​​​​ June July

Finished inventory. 2200. 2130. 2330 2660

Material required (2200×2). (2130×2). (2330×2). (2660×2)

4400. 4260. 4660. 5320C

Closingraw inventory. 2130. 2330. 2660

Total material. 6530. 6590. 7320

Hence ,may raw material purchase = 6590×6= $39540