​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

Beg Goods 850

January Sales 3500

25% of Following Months 950 -3600

End January 950 -3175

March Sales 3300

25 % of March (End of Feb) 825 -5425

April Sales 5000

25% of April (End of March) 125

Purchases in January 3600

Purchases in February 3175

Purchases in March 5425

Times Cost 0.2

Total $2,440.00

We have to account for the Beginning Inventory and then subtract the sales in the period and the desired ending inventory. This will give us the per month amount needed to satisfy the conditions.