Question

Cahuilla Corporation predicts the following sales in units for the coming four months:

	April		May		June		July
Sales in Units	370		410		430		370

Each month's ending Finished Goods Inventory should be 30% of the next month's sales. March 31 Finished Goods inventory is 111 units. A finished unit requires 5 pounds of direct material B at a cost of $3.00 per pound. The March 31 Raw Materials Inventory has 220 pounds of B. Each month's ending Raw Materials Inventory should be 20% of the following month's production needs. The budgeted purchases of pounds of direct material B during May should be:

Answer 1

S.No	Particulars	April	May	June	July
(a)	Sales	370	410	430	370
(b)	Add: Ending Inventory	123	129	111
		(410*30%)	(430*30%)	(370*30%)
(c )	Less: Beginning Inventory	111	123	129
(d)	Production [(a) + (b) - ( c) ]	382	416	412
(e )	Number of Pounds per unit	5	5	5
(f)	Total Number of Pounds required for Production [(d) *( e)]	1910	2080	2060
(g)	Add: Ending Inventory of Raw material	416	412
		(2080*20%)	(2060*20%)
(f)	Total [(f) + (g)]	2326	2492
(i)	Less: Opening Inventory of raw materials	220	416
(j)	Raw material to be purchased in pounds [(f) - (i)]	2106	2076
(k)	Raw material cost per pound	3	3
(l)	Budgeted cost of direct material B during May [(j)*(k)]	6318	6228

Budgeted cost of direct material B during May = $6228