Question

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Croy Inc. has the following projected sales for the next five months: Month April Sales in Units 3.540 3,945 4, 620 4, 175 3,910 July August 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 $3.40 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 3,743 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.

Answer 1

Solution 1:

Production Budget - Croy Inc.
Particulars	April	May	June	Total
Sales units	3540	3945	4620	12105
Add: Desired ending inventory (50% of next month sales)	1973	2310	2088	2088
Less: Opening Inventory	1770	1973	2310	1770
Budgeted Production units	3743	4283	4398	12423

Solution 2:

Raw Material Budget - Croy Inc.
Particulars	April	May	June	Total
Budgeted Production Units	3743	4283	4398	12424
Material needed per unit	2	2	2	2
Material needed for budgeted production	7486	8566	8796	24848
Add: Budgeted ending inventory (50% of next month material requirements)	4283	4398	4043	4043
Total material requirements	11769	12964	12839	28891
Less: Beginning inventory	3743	4283	4398	3743
Materials to be purchased (units)	8026	8681	8441	25148
Cost per lb.	$3.40	$3.40	$3.40	$3.40
Total budgeted direct materials cost	$27,288	$29,515	$28,699	$85,503