Ruiz Co. provides the following sales forecast for the next four months April Ma

Question

Ruiz Co. provides the following sales forecast for the next four months April MayJune July 770 Sales (units) 650 730 680 The company wants to end each month with ending finished goods inventory equal to 20% of next month's forecasted sales. Finished goods inventory on April 1 is 130 units. Assume July's budgeted production is 680 units. In addition, each finished unit requires four pounds (Ibs.) 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 1,066 pounds Assume direct materials cost $5 per pound xercise 7-3 Manufacturing: Production budget LO P1 repare a production budget for the months of April, May, and June RUIZ CO Production Budget For April, May, and June April May June Next month's budgeted sales (units) Ratio of inventory to future sales 730 20% 680 770 Required units of available production Units to be produced

Explanation / Answer

Production budget :

April May June Sales units 650 730 680 Add: Desired ending inventory 146 136 154 Total needs 796 866 834 Less: Beginning inventory -130 -146 -136 Units to be produced 666 720 698

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