Question

Zira Co. reports the following production budget for the next four months. April May June July...

Zira Co. reports the following production budget for the next four months.

April May June July
Production (units) 672 700 706 686


Each finished unit requires five pounds 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 1,008 pounds. Assume direct materials cost $6 per pound.

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
Budgeted production in units [a] 672 700 706 686
materials requirements per unit [b] 5 5 5 5
materials needed for production [c= a*b] 3360 3500 3530 3430
budgeted ending inventory [d= 0.30 of next month] 1050 1059 1029
total materials requireents [e = c+d] 4410 4559 4559
beginning inventory [f] 1008 1050 1059
materials to be purchased [g = e-f] 3402 3509 3500
cost per lb [h ] 6 6 6
total budgeted direct mmaterials cost [g*h] 20412 21054 21000
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