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)



Rate Materials A (Units)



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.