Question

Zira co reports the following production budget for the next four months. April May June July Production (units) 664 705 697 677 Each finished unit requires six 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 725 pounds. Assume direct materials cost $6 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

Instructions are below.

Step-by-step explanation:

Giving the following information:

Production:

April= 664

May= 705

June= 697

July= 677

Each finished unit requires six pounds of raw materials.

Ending inventory= 20% of next month's production needs.

Beginning raw materials inventory for april was 725 pounds.

Assume direct materials cost $6 per pound.

To calculate the direct material requirements, we need to use the following formula:

Purchases= production + desired ending inventory - beginning inventory

April (pounds):

Production= 664*6= 3,984

Ending inventory= (705*6)*0.2= 846

Beginning inventory= (725)

Total pounds= 4,105

Total cost= 4,105*6= $24,630

May (pounds):

Production= 705*6= 4,230

Ending inventory= (697*6)*0.2= 836

Beginning inventory= (846)

Total pounds= 4,220

Total cost= 4,220*6= $25,320

June (pounds):

Production= 697*6= 4,182

Ending inventory= (677*6)*0.2= 812

Beginning inventory= (836)

Total pounds= 4,158

Total cost= 4,158*6= $24,948