Question

Zira Co. reports the following production budget for the next four months. April May June July Production (units) 632 660 666 646 Each finished unit requires four pounds of raw materials and the company wants to end each month with raw materials inventory equal to 20% of next month’s production needs. Beginning raw materials inventory for April was 506 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.)

Answer 1

Answer:

Results are below.

Explanation:

Giving the following information:

Production:

April= 632

May= 660

June= 666

July= 646

Standard quantity per unit= 4 pounds of raw materials

The company wants to end each month with raw materials inventory equal to 20% of next month’s production needs.

Beginning raw materials inventory for April was 506 pounds.

Assume direct materials cost $4 per pound.

Raw materials budget:

April (in pounds):

Production= 632*4= 2,528

Desired ending inventory= (660*0.2)*4= 528

Beginning inventory= (506)

Total pounds= 2,550

Total cost= 2,550*4= $10,200

May (in pounds):

Production= 660*4= 2,640

Desired ending inventory= (666*0.2)*4= 533

Beginning inventory= (528)

Total pounds= 2,645

Total cost= 2,645*4= $10,580

June (in pounds):

Production= 666*4= 2,664

Desired ending inventory= (646*0.2)*4= 517

Beginning inventory= (533)

Total pounds= 2,648

Total cost= 2,648*4= $10,592