Question

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 30% of next month's forecasted sales. Finished goods inventory on April 1 is 207 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 month’s production needs. Beginning raw materials inventory for April was 1,071 pounds. Assume direct materials cost $3 per pound.

Prepare a direct materials budget for April, May, and June. (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

Answer 1

	Direct Materials Budget
	For April, May, and June
	April	May	June
Budgeted production (units)	714	755	747
Materials requirements per unit	5	5	5
Materials needed for production	3570	3775	3735
Budgeted ending inventory (lbs.)	1133	1121	1080
Total materials requirements	4703	4896	4815
Beginning inventory (lbs.)	(1071)	(1133)	(1121)
Materials to be purchased	3632	3763	3694
Cost per pound	3	3	3
Total cost	10896	11289	11082
Workings:
	Production Budget
	April	May	June
Next month's budgeted sales (units)	770	720	810
Ratio of inventory to future sales	30%	30%	30%
Budgeted ending inventory (units)	231	216	243
Budgeted unit sales for month	690	770	720
Required units of available production	921	986	963
Budgeted beginning inventory (units)	(207)	(231)	(216)
Units to be produced	714	755	747
Note: Anwers might vary +1 due to rounding off