Chandler Ltd. estimates sales for the second quarter of 2014 will be as follows.

Question

Chandler Ltd. estimates sales for the second quarter of 2014 will be as follows. Month Units April 2,550 May 2,440 June 2,380 The target ending inventory of finished products is as follows. March 31 2,040 April 30 2,250 May 31 2,150 June 30 2,360 2 units of material are required for each unit of finished product. Production for July is estimated at 2,780 units to start building inventory for the fall sales period. Chandler’s policy is to have an inventory of raw materials at the end of each month equal to 60% 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.

Explanation / Answer

$2340

(op.stock+p=clo stock+sales)

2550+p=2440+2150

=2340

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