In: Accounting
Croy Inc. has the following projected sales for the next five months:
Month | Sales in Units |
April | 3,500 |
May | 3,870 |
June | 4,630 |
July | 4,115 |
August | 4,000 |
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 $3.20 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 3,685 pounds.
Required:
1. Determine budgeted production for April, May, and June.
2. Determine budgeted cost of materials purchased for April and May.
Complete this question by entering your answers in the tabs below.
Determine budgeted production for April, May, and June. (Do not round your intermediate calculations and round your final answers to the nearest whole number.)
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Complete this question by entering your answers in the tabs below.
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.)
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1.
Production Budget | |||
April | May | June | |
Unit number of sales | 3,500 | 3,870 | 4,630 |
Add: ending Inventory | 3,870*50% = 1,935 | 4,630*50% = 2,315 | 4,115*50% = 2,057.50 |
Less: Beginning inventory | 3,500*50% = 1,750 | 3,870*50% = 1,935 | 4,630*50% = 2,315 |
Budgeted Production | 3,685 | 4,250 | 4,373 |
2.
April | May | |
Budgeted Production | 3,685 | 4,250 |
Direct material required per unit | 2 pounds | 2 pounds |
Total Direct material required for production | 7,370 | 8,500 |
Add: Ending raw material | 8,500*50% = 4,250 | 8,745*50% = 4,372.50 |
Less: Beginning Inventory | 3685 | 8,500*50% = 4,250 |
Raw material to be purchased | 7,935 | 8,623 |
Direct Material cost per pound | $ 3.20 | $ 3.20 |
Total Material purchase cost | $ 25,392 | $ 27,592 |
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