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

Question

Ruiz Co. provides the following sales forecast for the next four months: April May June July 590 670620 710 Sales (units) The company wants to end each month with ending finished goods inventory equal to 30% of next month's forecasted sales. Finished goods inventory on April 1 is 177 units. Assume July's budgeted production is 620 units. In addition, each finished unit requires six pounds (Ibs.) 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 1,105 pounds. Assume direct materials cost $5 per pound. Exercise 7-4 Manufacturing: Direct materials budget LO P1 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 (bs.) Total materials requirements (Ibs.) Materials to be purchased (lbs.) Total budgeted direct materials cost

Explanation / Answer

Production Budget For April, May, and June April May June Next month's budgeted sales (units) 670 620 710 Ratio of inventory to future sales 30% 30% 30% Budgeted ending inventory (units) 201 186 213 Budgeted unit sales for month 590 670 620 Required units of available production 791 856 833 Budgeted beginning inventory (units) 177 201 186 Units to be produced 614 655 647 Direct Materials Budget For April, May, and June April May June Units to be produced 614 655 647 units Materials requirement per unit 6 6 6 pounds Materials needed for production (pounds) 3,684 3,930 3,882 pounds Budgeted ending inventory (pounds) 1,179 1,165 1116 pounds Total materials requirements (pounds) 4,863 5,095 4,998 pounds Beginning inventory (pounds) 1,105 1,179 1,165 pounds Materials to be purchased (pounds) 3,758 3,916 3,833 pounds Material price per pounds $5.00 $5.00 $5.00 per pound Total cost of direct materials purchases $18,790.00 $19,578.00 $19,167.00

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