Question

Cahuilla Corporation predicts the following sales in units for the coming four months: April May June...

Cahuilla Corporation predicts the following sales in units for the coming four months: April May June July Sales in Units 320 360 380 320 Each month's ending Finished Goods Inventory should be 40% of the next month's sales. March 31 Finished Goods inventory is 128 units. A finished unit requires 5 pounds of direct material B at a cost of $2.00 per pound. The March 31 Raw Materials Inventory has 280 pounds of B. Each month's ending Raw Materials Inventory should be 30% of the following month's production needs. The budgeted cost of direct material B during May should be:

Homework Answers

Answer #1
S.No Particulars April May June July
(a) Sales 320 360 380 320
(b) Add: Ending Inventory 144 152 128
(360*40%) (380*40%) (320*40%)
(c ) Less: Beginning Inventory 128 144 152
(d) Production [(a) + (b) - ( c) ] 336 368 356
(e ) Number of Pounds per unit 5 5 5
(f) Total Number of Pounds required for Production [(d) *( e)] 1680 1840 1780
(g) Add: Ending Inventory of Raw materia 552 534
(1840*30%) (1780*30%)
(f) Total [(f) + (g)] 2232 2374
(i) Less: Opening Inventory of raw materials 280 552
(j) Raw material to be purchased in pounds [(f) - (i)] 1952 1822
(k) Raw material cost per pound 2 2
(l) Budgeted cost of direct material B during May [(j)*(k)] 3904 3644

Budgeted cost of direct material B during May = $ 3644

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