Ruiz Co. provides the following sales forecast for the next four months: ...
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Accounting
Ruiz Co. provides the following sales forecast for the next four months:
April
May
June
July
Sales (units)
690
770
720
810
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 276 units. Assume July's budgeted production is 720 units. In addition, each finished unit requires five pounds (lbs.) of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next months production needs. Beginning raw materials inventory for April was 1,083 pounds. Assume direct materials cost $5 per pound.
RUIZ CO.
Direct Materials Budget
For April, May, and June
April
May
June
Budgeted production (units)
770
720
Materials requirements per unit
40
40
40
lbs.
Materials needed for production (lbs.)
Budgeted ending inventory (lbs.)
690
770
720
lbs.
Total materials requirements (lbs.)
30
lbs.
Beginning inventory (lbs.)
Materials to be purchased (lbs.)
Cost per lb.
Total budgeted direct materials cost
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