Question

Croy Inc. has the following projected sales for the next five months:   

Month	Sales in Units
April	3,850
May	3,875
June	4,260
July	4,135
August	3,590

    
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 3,865 pounds.     

Required:

1. Determine budgeted production for April, May, and June.

    

2. Determine the budgeted cost of materials purchased for April, May, and June. (Round your answers to 2 decimal places.)

Answer 1

1	Production Budget
		April	May	June	July
	Budgeted sales in units for the month	3,850	3,875	4,260	4,135
	Add: Ending inventory of finished goods (60% of next month's sales)	2,325	2,556	2,481	2154
	Less: Beginning inventory	-	(2,325)	(2,556)	(2,481)
	Budgeted production in units	6,175	4,106	4,185	3,808
2	Budgeted cost of materials Purchased
		April	May	June	July
	Budgeted production in units	6,175	4,106	4,185	3,808
	Material required for each unit of finished goods ( Pounds )	2	2	2	2
	Raw material required for budgeted production ( Pounds )	12,350	8,212	8,370	7,616
	Add: Ending inventory of Materials                      (50 % of next month's production needs )	4,106	4,185	3,808
	Less: Beginning inventory of Materials	(3,865)	(4,106)	(4,185)
	Budgeted Raw Material Purchases ( Pounds )	12,591	8,291	7,993
	Direct Material Cost per Pound ( $ )	3.10	3.10	3.10
	Budgeted Cost of Material Purchased ( $ )	39,032.10	25,702.10	24,778.30