Question

Required information Use the following information for the Exercises below. Ruiz Co. provides the following sales...

Required information

Use the following information for the Exercises below.

Ruiz Co. provides the following sales forecast for the next four months:

   

April May June July
Sales (units) 650 730 680 770


The company wants to end each month with ending finished goods inventory equal to 20% of next month's forecasted sales. Finished goods inventory on April 1 is 130 units. Assume July's budgeted production is 680 units. In addition, each finished unit requires six pounds (lbs.) of raw materials and the company wants to end each month with raw materials inventory equal to 20% of next month’s production needs. Beginning raw materials inventory for April was 799 pounds. Assume direct materials cost $4 per pound.

Exercise 7-3 Manufacturing: Production budget LO P1

Prepare a production budget for the months of April, May, and June.

7-4 Required information

Use the following information for the Exercises below.

Ruiz Co. provides the following sales forecast for the next four months:

   

April May June July
Sales (units) 690 770 720 810


The company wants to end each month with ending finished goods inventory equal to 20% of next month's forecasted sales. Finished goods inventory on April 1 is 138 units. Assume July's budgeted production is 720 units. In addition, each finished unit requires six pounds (lbs.) of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month’s production needs. Beginning raw materials inventory for April was 1,271 pounds. Assume direct materials cost $6 per pound.

Exercise 7-4 Manufacturing: Direct materials budget LO P1

Prepare a direct materials budget for April, May, and June. (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

Homework Answers

Answer #1
April May June July
Sales Units 690 770 720 810
Production Budget: April May June July
Sales Units 690 770 720 810
Add: Desired Closing FG 154 144 162 (20% of Next Month Sales)
Total Needs 844 914 882
Less: Opening Stock 138 154 144
Production to be Done 706 760 738 720
(Given)
Direct Material Budget April May June July
Production to be Done 706 760 738 720
Material Required (Production *6 Pounds) 4236 4560 4428 4320
Add: Desired Closing Inventory 1368 1328.4 1296 (30% of Next Month Production Needs)
Total Needs 5604 5888.4 5724
Less: Opening Stock 1271 1368 1328.4
Raw Material to be Purchased in Units 4333 4520.4 4395.6
Raw Material to be Purchased in Value 25998 27122.4 26373.6 (Units *6)
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