Question

Croy Inc. has the following projected sales for the next five months:   

Month	Sales in Units
April	3,410
May	3,885
June	4,590
July	4,175
August	3,900

Croy’s finished goods inventory policy is to have 60 percent of the next month’s sales on hand at the end of each month. Direct material costs $2.90 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month’s production needs on hand at the end of each month. Raw materials on hand at March 31 totaled 3,695 pounds.     

Required:

1. Determine budgeted production for April, May, and June. (Do not round your intermediate calculations and round your final answer to the nearest whole number.)

2. Determine the budgeted cost of materials purchased for April, May, and June. (Use rounded Budgeted Production units in intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

	1
		Budgeted Production:	April	May	June	July	Aug
		Unit Sales	3410	3885	4590	4175	3900
		Add: Desired FG (60% of Next Month Unit Sales)	2331	2754	2505	2340
		Total Requirement	5741	6639	7095	6515
		Less: Opening Inventory	2046	2331	2754	2505		April=(3410*60%)
		Budgeted Production	3695	4308	4341	4010
	2		April	May	June	July
		Budgeted Production	3695	4308	4341	4010
		Direct Material Requirement PU	2	2	2	2
		Raw Material Required for Production	7390	8616	8682	8020
		Add: Desired Closing Inventory	4308	4341	4010	(50% of Next Month Requirement)
		Total Requirement	11698	12957	12692
		Less: Opening Inventory	3695	4308	4341
		Raw Material To be Purchased in Units	8003	8649	8351
		Direct Material Rate PU	2.90	2.90	2.90
		Raw Material To be Purchased in Value	23208.7	25082.1	24217.9