Question

Required information Ruit Co provides the following sales forecast for the next four months Sales unita) April 350 May 630 June 580 July 670 The company wants to end each month with ending finished goods inventory equal to 30% of next month's forecasted sales. Finished goods inventory on April 1 is 165 units. Assume July's budgeted production is 580 units. In addition, each finished unit requires four pounds (lbs) 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 689 pounds. Assume direct materials cost $3 per pound Prepare a production budget for the months of April, May, and June RUZ CO Production Budget For April May, and June April Next month's budgeted sales (units) 630 Ratio of inventory to future sales Regenovable productie Units to be produced

Answer 1

Production Budget :-

	April	May	June
Next months budgeted sales (units)	630	580	670
Ratio of inventory to future sales	30%	30%	30%
Budgeted ending inventory (units)	189	174	201
Budgeted unit sales for month	550	630	580
Required units of available production	739	804	781
Budgeted beginning inventory (units)	165	189	174
Units to be produced	574	615	607

Direct Material Budget :-

	April	May	June
Budgeted production (units)	574	615	607	units
Materials requirement per unit	4	4	4	lbs
Materials needed for production (lbs)	2296	2460	2428	lbs
Budgeted ending inventory (lbs)	(2460 * 30%) =738	(2428 * 30%) =728	(580*4*30%) =696	lbs
Total materials requirement (lbs)	3034	3188	3124	lbs
Beginning inventory (lbs)	689	738	728	lbs
Materials to be purchased (lbs)	2345	2450	2396	lbs
Cost per lb	$3	$3	$3	per lb
Total budgeted direct materials cost	$7035	$7350	$7188