Question

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

Month		Units
April		2,590
May		2,450
June		2,360

The target ending inventory of finished products is as follows.

March 31		2,030
April 30		2,240
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 2,620 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 $6 per unit throughout the period.

Calculate the May raw materials purchases in dollars.

Raw material purchases cost

$

Answer 1

Production budget
	April	May	June
Units to be sold	2590	2450	2360
Desired Ending Finished Inventoey	2240	2170	2330
Required Units of Available Production	4830	4620	4690
Less : Beginning Finished Inventory	2030	2240	2170
Budgeted Production	2800	2380	2520

For April may and June
	April	May	June
Budgeted Production (unis)	2800	2380	2520
Raw material required per unit (Lbs)	2	2	2
Raw material needed for Production (lbs)	5600	4760	5040
Budgeted Ending Inventory (lbs)	1904	2016	2096
Total material requirements (lbs)	7504	6776	7136
Beginning Inventory (Lbs)		1904	2016
material to be Purchased (lbs)	7504	4872	5120
Cost per lb.	6	6	6
Total budgeted direct material cost	$           45,024.00	$           29,232.00	$            30,720.00

Raw material purchases cost

$ 29,232