Question

Required information

Ruiz Co. provides the following sales forecast for the next four months:

   

	April		May		June		July
Sales (units)	660		740		690		780

The company wants to end each month with ending finished goods inventory equal to 40% of next month's forecasted sales. Finished goods inventory on April 1 is 264 units. Assume July's budgeted production is 690 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 1,038 pounds. Assume direct materials cost $4 per pound.

	RUIZ CO. Direct Materials Budget For April, May, and June April May June Materials needed for production (lbs.) Total materials requirements (lbs.) Materials to be purchased (lbs.) Total budgeted direct materials cost

Answer 1

--Requirement:

RUIZ CO.
Direct Materials Budget
For April, May, and June
	April	May	June
Budgeted production (units)	692	720	726	2,138
Raw material required per unit	5	5	5	5
Materials needed for production (lbs.)	3,460	3,600	3,630	10,690
Add: Desired ending inventory of material	1,080	1,089	1,035	1,035
Total materials requirements (lbs.)	4,540	4,689	4,665	11,725
Less: Beginning material inventory	1,038	1,080	1,089	1,038
Materials to be purchased (lbs.)	3,502	3,609	3,576	10,687
Cost per unit of material	$4	$4	$4	$4
Total budgeted direct materials cost	$14,008	$14,436	$14,304	$42,748

--Working for "Budgeted units"

	April	May	June	July
Budgeted sales	660	740	690	780
Add: Desired ending inventory (40% of next months sale)	296	276	312	0
Less: Beginning inventory	264	296	276	312
Budgeted production (units)	692	720	726