FULL SCREEN BACK ensing Ltd. estimates sales for the second quarter of 2017 will

Question

FULL SCREEN BACK ensing Ltd. estimates sales for the second quarter of 2017 will be as follows Month April May June 2,520 2,440 2,390 he target ending inventory of finished products is as follows. March 31 2,010 pril 30 2,280 May 31 2,170 une 30 2,330 units of material are required for each unit of finished product. Production for Aly estimated at 2,750 units to start bulding inventory for the fall sales nventory 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 LINK TO TEXT

Explanation / Answer

Unit sale for May = 2440

Add:Closing finished inventory = 2170

less:Beginning finished inventory = 2280

Budgeted production in May = 2330

Raw material needed for May = 2330 * 2 unit

= 4660 units

Raw material purchases cost = [50% * 4660 * $7] + [50% * 5100 * $7]

= $16310 + $17850

= $34160

Note:- Raw material needed for June

Unit sale for June = 2390

Add:Closing finished inventory = 2330

less:Beginning finished inventory = 2170

Budgeted production in May = 2550

Raw material needed for May = 2550 * 2 unit

= 5100 units

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