Question

Croy Inc. has the following projected sales for the next five months: Month Sales in Units April 3,600 May 3,810 June 4,570 July 4,170 August 4,000 Croy’s finished goods inventory policy is to have 70 percent of the next month’s sales on hand at the end of each month. Direct material costs $2.90 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 3,747 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.) 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.)

Answer 1

Production budget

	April	May	June	July
Unit Sales	3600	3810	4570	4170
Add: Desired ending inventory	2667	3199	2919	2800
Total	6267	7009	7489	6970
Less: Beginning inventory	-2520	-2667	-3199	-2919
Production units	3747	4342	4290	4051

Budgeted cost of material purchased

	April	may	June
Production units	3747	4342	4290
Raw material per unit	2	2	2
Raw material needed for production	7494	8684	8580
Add: Desired ending inventory	4342	4290	4051
Total	11836	12974	12631
Less: Beginning inventory	-3747	-4342	-4290
Raw material purchase pounds	8089	8632	8341
Cost per pound	2.9	2.9	2.9
Raw material purchase cost	23458.10	25032.80	24188.90