first correct answer will receive thumbs up Exercise 23-7 Rensing Ltd. estimates

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first correct answer will receive thumbs up

Exercise 23-7 Rensing Ltd. estimates sales for the second quarter of 2017 will be as follows. Month April May June Units 2,600 2,420 2,320 The target ending inventory of finished products is as follows March 312,010 April 30 2,270 May 31 2,100 une 30 2,360 2 units of material are required for each unit of finished product. Production for July is estimated at 2,670 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 $6 per unit throughout the period. Calculate the May raw materials purchases in dollars. Raw material purchases cost

Explanation / Answer

Production in May = 2420+2100-2270= 2250 Materials for production in May 4500 =2250*2 Add: Ending raw materials inventory 2580 =(2320+2360-2100)*2*50% 7080 Less: Beginning raw materials inventory 2250 =4500*50% Materials to be purchased 4830 Cost per unit 6 Raw material purchases cost 28980

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