Question

Croy Inc. has the following projected sales for the next five months: Month Sales in Units April 3,590 May 3,800 June 4,560 July 4,145 August 3,950 Croy’s finished goods inventory policy is to have 60 percent of the next month’s sales on hand at the end of each month. Direct material costs $2.60 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month’s production needs on hand at the end of each month. Raw materials on hand at March 31 totaled 3,716 pounds.

Required: 1. Determine budgeted production for April, May, and June. (Do not round your intermediate calculations and round your final answer to the nearest whole number.)

	April	May	June
Budgeted Production (Units)

2. Determine the budgeted cost of materials purchased for April, May, and June. (Use rounded Budgeted Production units in intermediate calculations. Round your answers to 2 decimal places.)

	April	May	June
Budgeted Cost of Material Purchased

Answer 1

Since Opening inventory of finished goods of April is not given, I am taking it as 0

Calculations	Particulars	April	May	June	July	August
A	Sales Quantity	3590	3800	4560	4145	3950
B = A of next month x 60%	Closing Inventory	2280	2736	2487	2370
C = B of previous month	Opening Inventory	0	2280	2736	2487	2370
E = A + B - C	Production required (1)	5870	4256	4311	4028
F	Material required per unit	2	2	2	2
G = E x F	Total material required	11740	8512	8622	8056
H = G of next month x 50%	Closing Inventory of raw materials	4256	4311	4028
I = H of previous month	Opening Inventory of raw materials	3716	4256	4311
J = G + H - I	Purchases required	12280	8567	8339
K	Price per unit of raw materials	2.6	2.6	2.6
L = J x K	Budgeted cost of materials purchased (2)	31928.00	22274.20	21681.40