Ramos Co. provides the following sales forecast and production budget for the next four months:  April May June July Sales (units)500 580 530 600 Budgeted production (units)442 570 544 540  The company plans for finished goods inventory of 120 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 30% of next month’s production needs. Beginning direct materials inventory for April was 663 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 $8,000 per month. Prepare a direct materials budget for April, May, and June.

Question
Asked Apr 17, 2019
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Ramos Co. provides the following sales forecast and production budget for the next four months:
 

  April   May   June   July  
Sales (units) 500   580   530   600  
Budgeted production (units) 442   570   544   540  
 


The company plans for finished goods inventory of 120 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 30% of next month’s production needs. Beginning direct materials inventory for April was 663 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 $8,000 per month.

 

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

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Expert Answer

Step 1

Budget:

Budget refers to the financial plan for the business activities a company intends to do in the future. There are various types of budgets a company may prepare.
Step 2

Prepare the direct materials ...

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