chandler ltd estimates sales for the second quarter of 2012 272988

Chandler Ltd. estimates sales for the second quarter of 2012 will be as follows.

Month Units

April …………..2,550

May ……………2,475

June ……………2,390

The target ending inventory of finished products is as follows.

March 31 …………. 2,000

April 30 ……………2,230

May 31 ……………. 2,190

June 30 ……………. 2,310

Two units of material are required for each unit of finished product. Production for July is estimated at 2,700 units to start building inventory for the fall sales period. Chandler’s policy is to have an inventory of raw materials at the end of each month equal to 60% of the following month’s production requirements. Raw materials are expected to cost $4 per unit throughout the period.

Instructions

Calculate the May raw materials purchases in dollars.

(CGA adapted)

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