Question

# Rensing Ltd. estimates sales for the second quarter of 2017 will be as follows. Month Units...

Rensing Ltd. estimates sales for the second quarter of 2017 will be as follows.

 Month Units April 2,590 May 2,440 June 2,400

The target ending inventory of finished products is as follows.

 March 31 2,000 April 30 2,290 May 31 2,150 June 30 2,310

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 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 = \$________

 Calculations Particulars April May June July A Sales units 2590 2440 2400 B Closing Inventory of finished goods 2290 2150 2310 C = B of previous month Opening inventory of finished goods 2000 2290 2150 D = A + B - C Production of finished goods 2880 2300 2560 2660 E Material required per unit 2 2 2 2 F = D x E Total material consumption for production 5760 4600 5120 5320 G = F of next month x 40% Closing inventory of raw materials 1840 2048 2128 H = G of previous month Opening inventory of raw materials 1840 2048 I = F + G - H Purchases of raw material required 4808 5200 J Price per unit of raw materials 4 4 K = I x J Raw materials purchase cost in dollars 19232 20800

So, May month purchases of raw materials in dollars is \$19,232

#### Earn Coins

Coins can be redeemed for fabulous gifts.