Question

Zira Co. reports the following production budget for the next four months. Production (units) April 694 May 735 Dune 727 July 7e Each finished unit requires four pounds of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month's production needs. Beginning raw materials inventory for April was 833 pounds. Assume direct materials cost $4 per pound Prepare a direct materials budget for April, May, and June (Round your intermediate calculations and final answers to the nearest whole dollar amount.) ZIRACO Direct Materials Budget For Apr May, and June April May June Materials needed for productions Total materials requirements

Answer 1

Solution

ZIRA CO

Direct material Budget

For April May and June

Particulars	April	May	June	July
Units to be Produced                                               A	694	735	727	707
Units Required for production                              B = A*4	2776	2940	2908
Desired Ending inventory(30% of Next Month Prodduction)     C	882	872	848
Total Material required                     D=B+C	3658	3812	3756
Less: Beginning Inventory                E	833	882	872
Purchase Requirement                     F=D+E	2825	2930	2884
Cost per Unit                                       G	4	4	4
Cost of Direct Material Purchase          H = G*4	11300	11722	11536
Note : How the desired ending inventory calculated
ie , Next Month production*30%*4 units

Thank You