Question
Ramos Co. provides the following sales forecast and production budget for the next four months: April May June July Sales (units) 670 750 700 770
Ramos Co. provides the following sales forecast and production budget for the next four months:
April | May | June | July | |||||
Sales (units) | 670 | 750 | 700 | 770 | ||||
Budgeted production (units) | 610 | 740 | 710 | 710 | ||||
The company plans for finished goods inventory of 290 units at the end of June. In addition, each finished unit requires 5 pounds of direct materials and the company wants to end each month with direct materials inventory equal to 20% of next months production needs. Beginning direct materials inventory for April was 610 pounds. Direct materials cost $2 per pound. Each finished unit requires 0.50 hours of direct labor at the rate of $16 per hour. The company budgets variable overhead at the rate of $20 per direct labor hour and budgets fixed overhead of $9,700 per month.
Exercise 22-8 Manufacturing: Direct materials budget LO P1
Prepare a direct materials budget for April, May, and June.
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