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 420 460 480 420

Each month's ending Finished Goods Inventory should be 40% of the next month's sales. March 31 Finished Goods inventory is 168 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 270 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:

Multiple Choice

a. $468.

b. $6,048.

c. $456.

d. $3,276.

e. $4,644.

Homework Answers

Answer #1
Answer is e. $ 4644
PRODUCTION BUDGET
APRIL MAY JUNE July
Budgeted Sales Units 420 460 480 420
Add: Desired Ending Finished inventory 184 192 168
Total Needs 604 652 648
Less: Beginning Finished Inventory 168 184 192
Required Production in units 436 468 456
RAW MATERIAL PURCHASE BUDGET
APRIL MAY JUNE
Budgeted Sales units 436 468 456
Raw material required per unit 5 5 5
Total Production needs 2,180 2,340 2,280
Add: Desired Ending Inventory 702 684
Total needs 2,882 3,024
Less: Beginning Inventory 654 702
Purchase Units 2,228 2,322
Cost price per unit 2.00 2.00
Budgeted Purchase in $ 4,456 4,644
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