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

Question

Month	Unit Sales
January	3,500
February	​3,800
March	​3,300
April	5,000
May	​5,000

Beginning finished goods inventory consisted of 850 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)

Answer 1

Unit Sales

Jan Feb Mar April

Unit Sales 3500 3800 3300 5000

DM per unit x2 x2 x2 X2

Total DM 7000 7600 6600 10,000

Desired End Inventory 1520 1320 2000

Less Beginning DM IN -1400 -1520 -1320

DM Needed 7120 7400 7280 21800

Cost Per yard $0.20 $0.20 $0.20 $0.20

Total Cost DM Needed $1,424.00 $1,480.00 $1,456.00

Total for Quarter $4360

@Jan BI = 7000 X 20%