Question

In: Accounting

Croy Inc. has the following projected sales for the next five months: Month Sales in Units...

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.

  • Required 1
  • Required 2

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)

Complete this question by entering your answers in the tabs below.

  • Required 1
  • 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

Solutions

Expert Solution

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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