Solution-Compute the may cash outlay for purchases of raw

Compute the may cash outlay for purchases of raw material

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Reference no: EM13334560

Production and cash-outlay computations
RPR, Inc., anticipates that 120,000 units of product K will be sold during May. Each unit of product K requires four units of raw material A. Actual inventories as of May 1 and budgeted inventories as of May 31 follow.

	1-May	31-May
Product K (Units)	55,000	60,000
Rate Materials A (Units)	40,000	37,000

Each unit of raw material A costs $8; RPR pays for all purchases in the month of acquisition. Invoices that account for 80% of the cost of materials acquired will be paid within 10 days of receipt, entitling the company to a 2% cash discount.

a. Determine the number of units of product K to be manufactured in May.

b. Compute the May cash outlay for purchases of raw material A.

	July	August	September
Beginning cash balance	$10,000	$ ?	$ ?
Add: Cash receipts	50,000	63,000	71,000
Deduct: Cash payments	-64,000	-58,000	-64,000
Cash excess (deficiency) before financing	($4,000)	$ ?	$ ?
Financing
Borrowing to maintain minimum balance	?	?	?
Principal repayment	?	?	?
Interest payment	?	?	?
Ending cash balance	$ ?	$ ?	$ ?

Reference no: EM13334560

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Compute the may cash outlay for purchases of raw material

Reference no: EM13334560

Reference no: EM13334560

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