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# ACC 206 Week 4 Chapter 6 Exercise 4 Production and cash-outlay computations

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## Product Description

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 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 \$ ? \$ ? \$ ?

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