Question

Croy Inc. has the following projected sales for the next five months: Month April May June July August Sales in Units 3,480 3,945 4,510 4,190 3,970 Croy's finished goods inventory policy is to have 60 percent of the next month's sales on hand at the end of each month. Direct material costs $3.10 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month's production needs on hand at the end of each month. Raw materials on hand at March 31 totaled 3,759 pounds. Required: 1. Determine budgeted production for April, May, and June. (Do not round your intermediate calculations and round your final answer to the nearest whole number.) April May June Budgeted Production (Units) 2. Determine the budgeted cost of materials purchased for April, May, and June. (Use rounded Budgeted Production units in intermediate calculations. Round your answers to 2 decimal places.) April May June Budgeted Cost of Material Purchased

Answer 1

Ans. 1	CROY   INC.
	Production Budget
	For three month April to June
	Particulars	April	May	June
	Expected units to be sold	3480	3945	4510
	Add: Desired ending inventory units	2367	2706	2514
	Total required units	5847	6651	7024
	Less: Beginning inventory units	-2088	-2367	-2706
	Units to be produced	3759	4284	4318
*Calculations for Ending inventory:					*Calculations for Beginning inventory:
Months				Months
April	3945 * 60%	2367		April	Ending inventory of March	2088
May	4510 * 60%	2706		May	Ending inventory of April	2367
June	4190 * 60%	2514		June	Ending inventory of May	2706
	Beginning finished goods invenotry of April =   Ending inventory of March = 60% of April month's sales
	3,480 * 60%     =   2,088 units
Ans. 2	CROY   INC.
	Direct Materials Budget
	For three month April to June
	Particulars	April	May	June
	Budgeted production (units)	3759	4284	4318
	(X) Materials requirement per unit	2	2	2
	Materials needed for production	7518	8568	8636
	Add: budgeted ending inventory	4284	4318	4058
	Total materials requirements	11802	12886	12694
	Less: Budgeted beginning inventory	-3759	-4284	-4318
	Materials to be purchased	8043	8602	8376
	(X) Direct materials per unit	$3.10	$3.10	$3.10
	Total budgeted direct materials	$24,933	$26,666	$25,966
	*Calculations for Ending inventory:			*Calculations for Beginning inventory:
Months				Months
April	8,568 * 50%	4284		April	Ending inventory of March	3759
May	8,636 * 50%	4318		May	Ending inventory of April	4284
June	8,116 * 50%	4058		June	Ending inventory of May	4318
	*Calculations of materials needed for production for the month of July:
	Particulars	July
	Expected units to be sold	4190
	Add: Desired ending inventory units (3970*60%)	2382
	Total required units	6572
	Less: Beginning inventory units (end. of June)	-2514
	Budgeted production (units)	4058
	(X) Materials requirement per unit	2
	Materials needed for production	8116