Ruiz Co. provides the following sales forecast for the next four months: The com
ID: 2555994 • Letter: R
Question
Ruiz Co. provides the following sales forecast for the next four months:
The company wants to end each month with ending finished goods inventory equal to 25% of next month’s forecasted sales. Finished goods inventory on April 1 is 190 units. Assume July’s budgeted production is 540 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 30% of next month’s production needs. Beginning raw materials inventory for April was 663 pounds. Assume direct materials cost $4 per pound.
Prepare a production budget for the months of April, May, and June.
April May June July Sales (units) 500 580 540 620Explanation / Answer
Prepare a production budget for the months of April, May, and June.
April May June Sales units 500 580 540 Add Desired ending inventory 145 135 155 Total needs 645 715 695 Less: Beginning inventory (190) (145) (135) Production units 455 570 560Related Questions
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