Question

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.)

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)