AprilMay June July 520 600 550 640 sales (units) The company wants to end each m

Question

AprilMay June July 520 600 550 640 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 156 units. Assume July's budgeted production is 550 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 979 pounds. Assume direct materials cost $4 per pound. Exercise 20-3 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 600 550 640 Next month's budgeted sales (units) Ratio of inventory to future sales 30% Required units of available production Units to be produced

Explanation / Answer

Production budget :

April May June Sales units 520 600 550 Add: Desired ending inventory 180 165 192 Total needs 700 765 742 Less: Beginning inventory -156 -180 -165 Units to be produced 544 585 577

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