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:

 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