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In: Accounting

RyRy, Inc. manufactures dance apparel. Unit sales projections for the first five months of the upcoming...

RyRy, Inc. manufactures dance apparel. Unit sales projections for the first five months of the upcoming year are as? follows

Month

Unit Sales

January

3,400

February

?3,800

March

?3,300

April

4,900

May                      

?5,000

Beginning finished goods inventory consisted of 950 units. The desired inventory of units at the end of each month in the upcoming year should equal? 25% of the following? month’s budgeted unit sales.

Each unit requires 2 yards of fabric. The company wants to have? 20% of the fabric required for the next? month’s expected production on hand at the end of each month. This inventory requirement was met at the end of the previous year. The fabric costs? $0.20 per yard.

What is the expected dollar amount of raw material purchases for the first quarter of the upcoming? year? (round to the nearest dollar and use commas where?appropriate)

Solutions

Expert Solution

Jan Feb Mar
Budgeted sales (in units) 3400 3800 3300
Add: Desired ending finished goods inventory 950 825 1225
(25% of following months budgeted unit sales) (3800*25%) (3300*25%) (4900*25%)
Total sales required in units 4350 4625 4525
Less: Beginning finished goods inventory 950 950 825
(Given) (3800*25%) (3300*25%)
Units to be produced (in units) 3400 3675 3700
Raw material needed per unit in yards 2 2 2
Raw material required (in yards) 6800 7350 7400
Add: Desired units of ending raw material inventory 1470 1480 1960
(20% of next months expected production) (7350*20%) (7400*20%) (4900*2*20%)
Total units of raw material needed 8270 8830 9360
Less: Beginning raw material inventory 1360 1470 1480
(20% of current months expected production) (6800*20%) (7350*20%) (7400*20%)
Units of raw material to be purchased 6910 7360 7880
Unit cost per yard 0.2 0.2 0.2
Cost of raw material purchases in $ 1382 1472 1576

ekkarill92 answered 1 year ago
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