Croy Inc. has the following projected sales for the next five months: Croy’s fin

Question

Croy Inc. has the following projected sales for the next five months:   

Croy’s finished goods inventory policy is to have 60 percent of the next month’s sales on hand at the end of each month. Direct material costs $3.00 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 3,659 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.)

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 2 decimal places.)

Month Sales in Units April 3,440 May 3,805 June 4,600 July 4,185 August 3,970 Croy Inc. has the following projected sales for the next five months: MontnSales in Units Aoril May June July August 3,440 3.805 4.600 4.185 3.970 Croy's finished goods inventory policy is to have 60 percent of the next month's sales on hand at the end of each month. Direct material costs $3.00 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 a the end of each month. Raw materials on hand at March 31 totaled 3,659 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 2 decimal places.) April May June Budgeted Cost of Material Purchased

Explanation / Answer

Solution:

Budgeted Production in Units

Budgeted Production Units

April

May

June

June

August

Budgeted Sales Units

3440

3805

4600

4185

3970

Add: Ending Finished Goods Inventory (60% of next month's sales)

2283

2760

2511

2382

Total Needs

5723

6565

7111

6567

Less: Beginning Finished Goods Inventory (ending inventory of last month)

2064

2283

2760

2511

Budgeted Production in Units

3659

4282

4351

4056

Budgeted cost of materials purchased for April, May, and June

Budgeted Cost of Raw materials purchased

Budgeted Production in Units

3659

4282

4351

4056

Required Raw material per unit (pounds)

2

2

2

2

Total Required Raw Material for Production (pounds)

7318

8564

8702

8112

Add: Desired Ending Raw Material Inventory (50% of next month's production need)

4282

4351

4056

Less: Estimated Beginning Raw material inventory (ending inventory of last month)

3659

4282

4351

Total Budgeted Purchases Raw Material (pounds)

7941

8633

8407

Cost per foot

$3.00

$3.00

$3.00

Budgeted Cost of Raw materials purchases

$23,823

$25,899

$25,221

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Budgeted Production Units

April

May

June

June

August

Budgeted Sales Units

3440

3805

4600

4185

3970

Add: Ending Finished Goods Inventory (60% of next month's sales)

2283

2760

2511

2382

Total Needs

5723

6565

7111

6567

Less: Beginning Finished Goods Inventory (ending inventory of last month)

2064

2283

2760

2511

Budgeted Production in Units

3659

4282

4351

4056

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