Kirkland Ltd. estimates sales for the second quarter of 2022 will be as follows: 

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. Kirkland’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.

Transcribed Image Text:

April May June The target ending inventory of finished products is as follows: 2,000 2,230 2,190 2,310 March 31 April 30 May 31 June 30 2,550 units 2,475 units 2,390 units