Question

Croy Inc. has the following projected sales for the next five months: Month Sales in Units...

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.)

Homework Answers

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
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