Question

Croy Inc. has the following projected sales for the next five months: Month April May June July August Sales in Units 3,510 3,895 4,500 4,125 3,930 Croy's finished goods inventory policy is to have 50 percent of the next month's sales on hand at the end of each month. Direct materials costs $2.50 per pound, and each unit requires 2 pounds. Direct materials inventory policy is to have 50 percent of the next month's production needs on hand at the end of each month. Direct materials on hand at March 31 totaled 3,703 pounds. Required: 1. Determine budgeted production for April, May, and June. 2. Determine budgeted cost of materials purchased for April and May. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine budgeted production for April, May, and June. (Do not round your intermediate calculations and round your final answers to the nearest whole number.) April May June Budgeted Production (Units) Required 1 Required 2 >

Answer 1

1) Production budget

	April	May	June
Sales unit	3510	3895	4500
Add: Desired ending inventory	1947.50	2250	2062.50
Total	5457.50	6145	6562.50
Less: Beginning inventory	-1755	-1947.50	-2250
Budgeted production (units)	3703	4198	4313

2) Direct material budget

	April	May
Budgeted production	3703	4198
Direct material per unit	2	2
Direct material needed for production	7406	8396
Add: Desired ending inventory	4198	4313
Total	11604	12709
Less: Beginning inventory	-3703	-4198
Direct material purchase	7901	8511
Cost per pound	2.5	2.5
Direct material purchase cost	19752.50	21277.50