Required information Ruiz Co. provides the following sales forecast for the next
ID: 2393789 • Letter: R
Question
Required information
Ruiz Co. provides the following sales forecast for the next four months:
April May June July Sales (units) 550 630 580 670 The company wants to end each month with ending finished goods inventory equal to 40% of next month's forecasted sales. Finished goods inventory on April 1 is 220 units. Assume July's budgeted production is 580 units. In addition, each finished unit requires five pounds (lbs.) of raw materials and the company wants to end each month with raw materials inventory equal to 40% of next month's production needs. Beginning raw materials inventory for April was 1,164 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.) RUIZ CO Direct Materials Budget For April, May, and June April May June Materials needed for production (lbs.) Total materials requirements (lbs.) Materials to be purchased (lbs.) Total budgeted direct materials cost
Explanation / Answer
RUIZ CO.
Production Budget
For April, May, June
April
May
June
July
Budgeted sales (units) for the month
550
630
580
670
Add: Ending finished goods inventory
252
232
268
Less: Beginning finished goods inventory
220
252
232
Budgeted production units
582
610
616
580
RUIZ CO.
Direct Material Budget
For April, May, June
April
May
June
Total
Units to be produced
582
610
616
1,198
Material requirement per units (lbs.)
5
5
5
5
Material needed for production (lbs.)
2,910
3,050
3,080
Add: Ending material inventory
1,220
1,232
*1,160
Total material requirement
4,130
4,282
4,240
Less: Beginning material inventory
1,164
1,220
1,232
Materials to be purchased (lbs.)
2,966
3,062
3,008
9,036
Cost of material per lbs.
$6
$6
$6
$6
Total Budgeted direct materials cost
$ 17,796
$ 18,372
$ 18,048
$ 54,216
*1,160 = 580 x 5 x 0.4
RUIZ CO.
Production Budget
For April, May, June
April
May
June
July
Budgeted sales (units) for the month
550
630
580
670
Add: Ending finished goods inventory
252
232
268
Less: Beginning finished goods inventory
220
252
232
Budgeted production units
582
610
616
580
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