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

 

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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