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21 September, 17:10

Zira Co. reports the following production budget for the next four months. April May June July Production (units) 455 570 560 540 Each finished unit requires five pounds 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 663 pounds. Assume direct materials cost $4 per pound. Prepare a direct materials budget for April, May, and June.

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  1. 21 September, 20:55
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    Instructions are listed below.

    Explanation:

    Giving the following information:

    The production budget for the next four months.

    April = 455 units

    May = 570 units

    June = 560

    July = 540 units

    Each finished unit requires five pounds of raw materials.

    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 663 pounds. Assume direct materials cost $4 per pound.

    Materials required = Production for the month + ending inventory - beginning inventory

    April (In pounds):

    Production for the month = 455*5 = 2,275

    Ending inventory = 570*0.30 = 171*5 = 855

    Beginning inventory = (63)

    Total pounds = 3,067

    Total cost = 3,067*4 = $12,268

    May (in pounds):

    Production for the month = 570*5 = 2,850

    Ending inventory = 560*0.30 = 168*5 = 840

    Beginning inventory = (855)

    Total pounds = 2,835

    Total cost = 2,835*4 = $11,340

    June (in pounds):

    Production for the month = 560*5 = 2,800

    Ending inventory = 540*0.30 = 162*5 = 810

    Beginning inventory = (840)

    Total pounds = 2,770

    Total cost = $11,080
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