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Ruiz Co. provides the following sales forecast for the next four months:     April May June July Sales (units) 620 700 650 740 The company wants to...

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Accounting

Ruiz Co. provides the following sales forecast for the next fourmonths:

   

AprilMayJuneJuly
Sales (units)620700650740


The company wants to end each month with ending finished goodsinventory equal to 40% of next month's forecasted sales. Finishedgoods inventory on April 1 is 248 units. Assume July's budgetedproduction is 650 units. In addition, each finished unit requiresfive pounds (lbs.) of raw materials and the company wants to endeach month with raw materials inventory equal to 30% of nextmonth’s production needs. Beginning raw materials inventory forApril was 978 pounds. Assume direct materials cost $5 perpound.

Prepare a direct materials budget for April, May, and June.(Round your intermediatecalculations and final answers to the nearest whole dollaramount.)

Answer & Explanation Solved by verified expert
4.3 Ratings (526 Votes)

Direct Materials Budget
For April, May, and June
April May June
Budgeted production (units) 652 680 686 units
Materials requirements per unit 5 5 5 lbs.
Materials needed for production(lbs.) 3260 3400 3430 lbs.
Budgeted ending inventory (lbs.) 1020 1029 975 lbs.
Total materials requirements(lbs.) 4280 4429 4405 lbs.
Beginning inventory (lbs.) (978) (1020) (1029) lbs.
Materials to be purchased(lbs.) 3302 3409 3376 lbs.
Cost per lb. 5 5 5 per lb.
Total budgeted direct materials cost 16510 17045 16880
Workings:
Production Budget
April May June
Next month's budgeted sales (units) 700 650 740
Ratio of inventory to future sales 40% 40% 40%
Budgeted ending inventory (units) 280 260 296
Add budgeted sales for the month 620 700 650
Required units of available production 900 960 946
Deduct beginning inventory (units) -248 -280 -260
Production units 652 680 686

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