Question

Croy Inc. has the following projected sales for the next five months: Month Sales in Units April 3,560 May 3,810 June 4,550 July 4,110 August 3,990 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 $3.50 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 3,735 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

			Production Budget
			April	may	june	total		July
expected sale units			3,560	3,810	4,550	11,920		4,110
Add:Desired ending inventory			2667	3185	2877	2,877		2793
total needs			6,227	6,995	7,427	14,797		6,903
less:opening inventory			2492	2667	3185	2,492		2,877
production required			3,735	4,328	4,242	12,305		4,026
			Materials budget
			April	may	june	total		jluy
production required			3,735	4,328	4,242	12,305		4,026
pounds required per unit			2	2	2	2		2
total pounds			7470	8656	8484	24610		8052
Add:Desired inventory			4328	4242	4026	4026
total needs			11798	12898	12510	28636
less:openidng inventory			3,735	4328	4242	3735
total materials required			8,063	8570	8268	24,901
cost per pound			3.5	3.5	3.5	3.5
total materials cost			28220.5	29995	28938	87153.5