Acc206 Principles of Accounting: Week 4 Chapter 6 Exercises 4 - RPR, Inc.,

Acc206 Principles of Accounting
Week 4 Assignment - Chapter 6 and 7 Problems

Chapter 6 Exercise 4
4. 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
Raw 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.
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