Exercise 23-7 Rensing Ltd. estimates sales for the second quarter of 2017 will b

Question

Exercise 23-7 Rensing Ltd. estimates sales for the second quarter of 2017 will be as follows. Month Units April 2,520 May 2,440 June 2,390 The target ending inventory of finished products is as follows. March 31 2,010 April 30 2,280 May 31 2,170 June 30 2,330 2 units of material are required for each unit of finished product. Production for July is estimated at 2,750 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 $7 per unit throughout the period. Calculate the May raw materials purchases in dollars. Raw material purchases cost $

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April May June Estimated Sales Units 2520 2440 2390 Add: Ending Inventory 2280 2170 2330 Less: Beginning inventory 2010 2280 2170 Given in que Production Units 2790 2330 2550 2750 Raw Material per unit needed 2 2 2 2 Total Raw Material needed for production units 5580 4660 5100 5500 add: Closing Inventory 50% of following month 2330 2550 2750 less: beginning inventory 2790 2330 2550 April: 50% of 5580 May, June: Closing of last month is opening Purchases 5120 4880 5300 Cost per unit 7 7 7 May Raw Material Purchases 34160

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