Dan Jones is CFO for a newly formed manufacturing company. Below is the anticipated monthly production for the first six months of operation. Dan is interested in learning which of the first six months will require cash outlays of more than $40,000 toward the purchase of materials. Each unit requires 10 pounds of material at $6 per pound. All material is purchased in the month prior to its expected use. Purchases are paid for 15% in the month of purchase, 40% in the month following the month of purchase, and 45% in the second month following the month of purchase. Which months will require cash outlays in excess of the $40,000 amount? Does the production in any given month necessarily correspond to the cash flow for that same month? What are the business implications of your observation?
	UNITS Purchasing Activity (Month prior to production)	Total Pounds	Total materials cost	Paid in Month	Paid in Month Relating to Prior Month	Paid in Month Relating to Two Months Prior	Total
January	600
February	800
March	900
April	400
May	500
June	550
Total