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3 years ago

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Zira Co. reports the following production budget for the next four months. April May June July Production (units) 642 670 676 65

6 Each finished unit requires four pounds of raw materials and the company wants to end each month with raw materials inventory equal to 40% of next month’s production needs. Beginning raw materials inventory for April was 1,027 pounds. Assume direct materials cost $4 per pound. Prepare a direct materials budget for April, May, and June. (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

1 answer:

Liula [17]3 years ago

8 0

Answer:

Instructions are below.

Explanation:

Giving the following information:

Production (units):

April= 642

May= 670

June= 676

July= 656

Each finished unit requires four pounds of raw materials.

Desired ending inventory= 40% of next month’s production needs.

Beginning raw materials= 1,027 pounds.

Direct materials= $4 per pound.

We need to use the following formula to calculate the purchases:

Purchases= production + desired ending inventory - beginning inventory

<u>April (In pounds):</u>

Production= 642*4= 2,568

Ending inventory= (670*4)*0.4= 1,072

Beginning inventory= (1,027)

Total= 2,613

Total cost= 2,613*4= $10,452

<u>May (In pounds):</u>

Production= 670*4= 2,680

Ending inventory= (676*4)*0.4= 1,082

Beginning inventory= (1,072)

Total= 2,690

Total cost= 2,690*4= $10,760

<u>June (In pounds):</u>

Production= 676*4= 2,704

Ending inventory= (656*4)*0.4= 1,050

Beginning inventory= (1,082)

Total= 2,672

Total cost= 2,672*4= $10,688

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