Question
Hospitable Co. provides the following sales forecast for the next four months: April May June July Sales (units) 600 680 630 630 The company wants
Hospitable Co. provides the following sales forecast for the next four months: April May June July Sales (units) 600 680 630 630 The company wants to end each month with ending finished goods inventory equal to 40% of next months sales. Finished goods inventory on April 1 is 240 units. Assume Julys budgeted production is 630 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 20% of next months production needs. Beginning raw materials inventory for April was 632 pounds. Assume direct materials cost $4 per pound. Prepare a direct materials budget for April, May, and June.
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