Question

Rensing Ltd. estimates sales for the second quarter of 2020 will be as follows.

Month		Units
April		2,500
May		2,400
June		2,300

The target ending inventory of finished products is as follows.

March 31		2,000
April 30		2,200
May 31		2,100
June 30		2,300

2 units of material are required for each unit of finished product. Production for July is estimated at 2,600 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 40% of the following month’s production requirements.

Raw materials are expected to cost $4 per unit throughout the period.

Calculate the May raw materials purchases in dollars.

Raw material purchases cost

$

Answer 1