Production and cash-outlay computations RPR Inc. anticipates that 120000

Production and cash-outlay computations

RPR Inc. anticipates that 120000 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)

55000

60000

Rate Materials A (Units)

40000

37000

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.