Question

Required information Ramos Co. provides the following sales forecast and production budget for the next four months: July April May 670 June Sales (units) Budgeted production (units) 590 620 690 530 660 630 630 The company plans for finished goods inventory of 210 units at the end of June. In addition, each finished unit requires 5 pounds of direct materials and the company wants to end each month with direct materials inventory equal to 30 % of next month's production needs. Beginning direct materials inventory for April was 795 pounds. Direct materials cost $2 per pound. Each finished unit requires 0.50 hours of direct labor at the rate of $20 per hour. The company budgets variable overhead at the rate of $24 per direct labor hour and budgets fixed overhead of $8,900 per month Prepare a direct materials budget for April, May, and June. RAMOS CO. Direct Materials Budget For April, May, and June April May June Budget production (units) 630 units 530 660 Materials needed for production (lbs) Total materials requirements (bs) 10 Materlals to be purchased (bs) Materials price per pound Budgeted cost of direct materials purchases 0 0

Answer 1

Answers

• [1]

	Direct Material Budget
	For April, May, and June
		April	May	June
A	Budgeted production (units)	530	660	630
B	Material required per unit (lbs)	5	5	5
C = A x B	Material needed for production	2650	3300	3150
D	Add: Desired ending inventory material	990	945	945
E = C+D	Total material requirements	3640	4245	4095
F	Less: Beginning material invemtory	795	990	945
G = E - F	Material needed to be purchased	2845	3255	3150
H	Material price per pound	$                    2.00	$                   2.00	$                 2.00
I = G x H	Budgeted cost of direct material purchases	$              5,690.00	$             6,510.00	$          6,300.00

• [2]

	Direct Labor Budget
	For April, May, and June
		April	May	June
A	Budgeted production (units)	530	660	630	units
B	Direct labor hours per unit	0.5	0.5	0.5	direct labor hours
C = A x B	Total labor hours needed	265	330	315	direct labor hours
D	Direct labor cost per direct labor hour	$                   20.00	$                   20.00	$                                  20.00
E = C x D	Budgeted direct labor cost	$                    5,300.00	$                    6,600.00	$                                         6,300.00

• [3]

	RAMOS CO.
	Factory Overhead Budget
	For April, May, and June
		April	May	June
A	Total labor hours needed	265	330	315
B	Variable Overhead per direct labor hour	$                   24.00	$                   24.00	$                                  24.00
C = A x B	Budgeted variable overhead	$               6,360.00	$              7,920.00	$                              7,560.00
D	Budgeted fixed overhead	$               8,900.00	$              8,900.00	$                              8,900.00
E = C + D	Total budgeted factory overhead	$             15,260.00	$             16,820.00	$                            16,460.00