Question

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.)

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