Question

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

Month	Sales in Units
April	3,440
May	3,805
June	4,600
July	4,185
August	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 $3.00 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 3,659 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.)

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.)

Croy Inc. has the following projected sales for the next five months: MontnSales in Units Aoril May June July August 3,440 3.805 4.600 4.185 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 $3.00 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 a the end of each month. Raw materials on hand at March 31 totaled 3,659 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

Solution:

Budgeted Production in Units

Budgeted Production Units
	April	May	June	June	August
Budgeted Sales Units	3440	3805	4600	4185	3970
Add: Ending Finished Goods Inventory (60% of next month's sales)	2283	2760	2511	2382
Total Needs	5723	6565	7111	6567
Less: Beginning Finished Goods Inventory (ending inventory of last month)	2064	2283	2760	2511
Budgeted Production in Units	3659	4282	4351	4056

Budgeted cost of materials purchased for April, May, and June

Budgeted Cost of Raw materials purchased
Budgeted Production in Units	3659	4282	4351	4056
Required Raw material per unit (pounds)	2	2	2	2
Total Required Raw Material for Production (pounds)	7318	8564	8702	8112
Add: Desired Ending Raw Material Inventory (50% of next month's production need)	4282	4351	4056
Less: Estimated Beginning Raw material inventory (ending inventory of last month)	3659	4282	4351
Total Budgeted Purchases Raw Material (pounds)	7941	8633	8407
Cost per foot	$3.00	$3.00	$3.00
Budgeted Cost of Raw materials purchases	$23,823	$25,899	$25,221

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