Question

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

Month	Sales in Units
April	3,520
May	3,840
June	4,630
July	4,190
August	3,940

Croy’s finished goods inventory policy is to have 50 percent of the next month’s sales on hand at the end of each month. Direct materials costs $3.00 per pound, and each unit requires 2 pounds. Direct materials inventory policy is to have 50 percent of the next month’s production needs on hand at the end of each month. Direct materials on hand at March 31 totaled 3,680 pounds.

Required:

1. Determine budgeted production for April, May, and June.

2. Determine budgeted cost of materials purchased for April and May.

• Required 1

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

	April May June Budgeted Production (Units)

required 2

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

	April May Budgeted Cost of Material Purchased

Answer 1

1. Budgeted production for April May and June

	April	May	June	July
Units to be sold	3,520	3,840	4,630	4,190
Desired Ending finished goods inventory	1,920	2,315	2,095	1,970
Total units needed	5,440	6,155	6,725	6,160
Less: Beginning Finished goods Inventory	1,760	1,920	2,315	2,095
Units to be produced	3,680	4,235	4,410	4,065

July month is calculated for the purpose of Ending inventory for the calculation of Budgeted cost of materials purchased.

2. Calculation of Budgeted cost of materials purchased for April, May and June

	April	May	June
Budgeted production units	3,680	4,235	4,410
Materials required Per unit	2	2	2
Materials needed for production	7,360	8,470	8,820
Budgeted Ending inventory	4,235	4,410	4,065
Total materials required	11,595	12,880	12,885
Less:Beginning inventory	3,680	4,235	4,410
Materials to be purchased	7,915	8,648	8,475
Cost per unit	$3	$3	$3
Budgeted cost of materials purchased	$23,745	$25,935	$25,425

_____×_____

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