Ruiz Co provides the following sales forecast for the next f

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

The company wants to end each month with ending finished goods inventory equal to 30% of next month\'s forecasted sales. Finished goods inventory on April 1 is 171 units. Assume July\'s budgeted production is 600 units. In addition, each finished unit requires four pounds (lbs.) 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 713 pounds. Assume direct materials cost $4 per pound.

1. Prepare a production budget for the months of April, May, and June.

2. Prepare a direct materials budget for April, May, and June. (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

	April		May		June		July
Sales (units)	570		650		600		690

Solution

Ruiz Company Production Budget For April, May and June April May June Next Month budgeted sales (units) 650 600 690 Ratio of Inventory to future sales 30% 30% 30% Budgeted ending inventory (units) 195 180 207 Add: Budgeted unit sales for month 570 650 600 Required units of available production 765 830 807 Less: Budgeted beginning inventory (units) 171 195 180 Units to be produced 594 635 627 Ruiz Company Direct Material Budget For April, May and June April May June Budgeted production (units) 594 635 627 Material requirements per unit 4 4 4 Material needed for production (lbs)     2,376        2,540     2,508 Add: Budgeted ending inventory (lbs)         762            752         720 Total materials requirements     3,138        3,292     3,228 Less: Budgeted beginning inventory (lbs)         713            762         752 Materials to be purchased     2,425        2,530     2,476 Direct Material cost per pound $         4 $            4 $         4 Total budgeted direct material cost $ 9,700 $ 10,122 $ 9,902 Notes: Finished Goods Inventory = 30% Finished Goods Inventory, on April 1 = 171 units July Budgeted production = 600 units Required Raw Material = 4 pounds Raw material inventory = 30% Beginning Raw material = 713 July Production (600 X 4) = 2400 Ending Inventory of Current year is the openning inventory of next year.