Question

Required information Ruiz Co. provides the following sales forecast for the next four months: April Мay 590 June July Sales (units) 510 540 630 The company wants to end each month with ending finished goods inventory equal to 40% of next month's forecasted sales. Finished goods inventory on April 1 is 204 units. Assume July's budgeted production is 540 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 20 % of next month's production needs. Beginning raw materials inventory for April was 434 pounds. Assume direct materials cost $5 per pound Prepare a production budget for the months of April, May, and June. RUIZ CO. Production Budget For April, May, and June April May June 630 Next month's budgeted sales (units) 590 540 Ratio of inventory to future sales 40% Required units of available production Units to be produced

Answer 1

Production Budget is as prepared below:

RUIZ CO.
Production Budget
For April, may and June
	Month
Particulars	April	May	June
Next month Budgeted sales (units)	590	540	630
Ratio of inventory to future sales	40%	40%	40%
Budgeted ending inventory (units)	236	216	252
Budgeted unit sales for months	510	590	540
Required units of available production	746	806	792
Budgeted beginning inventory (units)	204	236	216
Units to be produced	542	570	576