Question

Croy Inc. has the following projected sales for the next five months Month April May June July August Sales in Units 3,520 3,920 4,600 4,130 3,950 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 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 3,720 pounds.

Answer 1

Month	Sales in Units	Finished Goods Inventory(Closing)	Finished Goods Inventory(Opening)	Production Required	Rawmaterial Inventory (Closing)	Rawmaterial Inventory (Opening)	Material Required for production	Raw Material Purchased
April	3,250	1,960	-	5,210	4,260	3,720	10,420	10,960
May	3,920	2,300	1,960	4,260	4,365	4,260	8,520	8,625
June	4,600	2,065	2,300	4,365	4,040	4,365	8,730	8,405
July	4,130	1,975	2,065	4,040	1,975	4,040	8,080	6,015
August	3,950	-	1,975	1,975	-	1,975	3,950	1,975

Month	April	May	June	July
Budgeted Cost of Material Purchased	$67,952	$53,475	$52,111	$37,293

Note:

Production required    = Sales + Finished Goods Inventory(Closing) -  Finished Goods Inventory(Opening)

Material Required for Production = Production Required x 2 units of Raw material

Raw Material Purchased = Material Required for Production + Rawmaterial Inventory (Closing) - Rawmaterial Inventory(Opening)

Budgeted Cost of Material Purchased = Raw Material Purhased x $6.20 per unit.