Question

Current Attempt in Progress New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. Rensing Ltd. estimates sales for the second quarter of 2017 will be as follows. Month Units April 2,600 May 2,470 June 2,320 The target ending inventory of finished products is as follows. March 31 2,030 April 30 2,200 May 31 2,130 June 30 2,380 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 70% 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 $ 21,752

Answer 1

Solution:

Particulars	April	May	June
Sales units	2600	2470	2320
Add: Desired ending inventory	2200	2130	2380
Less: Opening Inventory	2030	2200	2130
Required Production in units	2770	2400	2570

Particulars	April	May	June
Unit to Produce	2770	2400	2570
Material needed per unit (2 units)	2	2	2
Material needed for unit to produce	5540	4800	5140
Add: Desired units of material in ending inventory (70% of next month production)	3360	3598
Less: units of material in beginning inventory		3360
Units of material to purchase		5038
Cost per feet		$4.00
Budgeted cost of raw material purchases		$20,152

Answer = $20,152