Exercise 7-4 Manufacturing: Direct materials budget LO P1

Hospitable Co. provides the following sales forecast for the next four months:

	April	May	June	July
Sales (units)	630	710	660	660

The company wants to end each month with ending finished goods inventory equal to 20% of next months sales. Finished goods inventory on April 1 is 126 units. Assume Julys budgeted production is 660 units. In addition, each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 40% of next months production needs. Beginning raw materials inventory for April was 1,292 pounds. Assume direct materials cost $6 per pound.

Prepare a direct materials budget for April, May, and June.

https://gyazo.com/4c30f7028f237f98b8df605d19c1ab3c

HOSPITABLE CO Direct Materials Budget For April, May, and June April May June Budgeted production (units) 700 660 units iAK Materials needed for production Total materials requirements Materials to be purchased Total cost