Croy’s finished goods inventory policy is to have 50 percent of the next month’s

Question

Croy’s finished goods inventory policy is to have 50 percent of the next month’s sales on hand at the end of each month. Direct material costs $3.50 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month’s production needs on hand at the end of each month. Raw materials on hand at March 31 totaled 3,735 pounds.

Croy Inc. has the following projected sales for the next five months: Month April May June July August Sales in Units 3,580 3,890 4,610 4,110 3,920 Croy's finished goods inventory policy is to have 50 percent of the next month's sales on hand at the end of each month. Direct material costs $3.50 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month's production needs on hand at the end of each month. Raw materials on hand at March 31 totaled 3,735 pounds. Required 1. Determine budgeted production for April, May, and June. (Do not round your intermediate calculations and round your final answer to the nearest whole number.) April May June Budgeted Production (Units) 2. Determine the budgeted cost of materials purchased for April, May, and June. (Use rounded Budgeted Production units in intermediate calculations. Round your answers to decimal places.) April May June Budgeted Cost of Material Purchased

Explanation / Answer

Solution 1:

Solution 2:

Production Budget - Croy Particulars April May June Total July Sales units 3580 3890 4610 12080 4110 Add: Desired ending inventory (50% of next month sales) 1945 2305 2055 2055 1960 Less: Opening Inventory 1790 1945 2305 1790 2055 Budgeted production units 3735 4250 4360 12345 4015

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