Question

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

Month	Sales in Units
April	3,480
May	3,880
June	4,600
July	4,180
August	3,980

Croy’s finished goods inventory policy is to have 70 percent of the next month’s sales on hand at the end of each month. Direct material costs $2.50 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 3,760 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.)

	April	May	June
Budgeted Production (Units)

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.)

	April	May	June
Budgeted Cost of Material Purchased

Answer 1

1.

	April	May	June
Budgeted sales	3,480	3,880	4,600
Add: Ending inventory	3,880*70% = 2,716	4,600*70% = 3,220	4,180*70% = 2,926
Less: Beginning inventory	3,480*70% = 2,436	3,880*70% = 2,716	4,600*70% = 3,220
Budgeted production	3,760	4,384	4,306

July

4180

3,980*70% = 2,786

4,180*70% = 2,926

4040

2.

	April	May	June
Budgeted production	3,760	4,384	4,306
Raw material required per unit	2	2	2
Total raw material required	7,520	8,768	8,612
Add: Ending raw material inventory	8,768*50% = 4,384	8,612*50% = 4,306	4,040*2*50% = 4,040
Less: Beginning raw material inventory	3,760	8,768*50% = 4,384	8,612*50% = 4,306
Raw material to be purchased	8,144	8,690	8,346
Raw material cost per unit	$ 2.50	$ 2.50	$ 2.50
Budgeted cost of material purchased	$                       20,360	$                       21,725	$                            20,865

You can reach me over comment box if you have any doubts. Please rate this answer