Question

4. James Co. has projected sales of $200,000 in April, $250,000 in May, $300,000 in June and $200,000 in July. James desires an ending finished goods inventory each month equal to 30% of next month’s projected sales. If finished goods ending in inventory in March was $70,000, prepare a production budget for each of the months of April, May, and June. The sales price for each unit was $10 and the markup on Cost was 25 per cent.

5. Based on the information computed in Problem 4, prepare a direct materials budget for each of the months of April, May, and June of beginning direct material in April was 500 pounds, 5 pounds of raw material was required for each unit finished product produced, and an ending inventory equal to 40% of next month’s production needs is desired.

Answer 1

4)

	April	May	June
Sales	200000	250000	300000
sales in units	200000/10= 20000	250000/10=25000	300000/10=30000
Desired ending inventory	7500    [25000*.30]	9000    [30000*.30.]	6000    [20000*.30]
less:Beginning FG	(7000)   [700000/10]	(7500)	(9000)
Production in units	20500	26500	27000

5)Please provide august sales to compute production requirement for July .Also direct material cost per pound .