Required information Ruiz Co. provides the following sales forecast for the next four months: Sales (units) April May 660 740 June 690 July 780 The company wants to end each month with ending finished goods inventory equal to 20% of next month's forecasted sales. Finished goods inventory on April 1 is 132 units. Assume July's budgeted production is 690 units. In addition, each finished unit requires five pounds (lbs.) of raw materials and the company wants to end each month with raw materials inventory equal to 20% of next month's production needs. Beginning raw materials inventory for April was 676 pounds. Assume direct materials cost $5 per pound. Prepare a production budget for the months of April, May, and June.
Required information Ruiz Co. provides the following sales forecast for the next four months: Sales (units) April May 660 740 June 690 July 780 The company wants to end each month with ending finished goods inventory equal to 20% of next month's forecasted sales. Finished goods inventory on April 1 is 132 units. Assume July's budgeted production is 690 units. In addition, each finished unit requires five pounds (lbs.) of raw materials and the company wants to end each month with raw materials inventory equal to 20% of next month's production needs. Beginning raw materials inventory for April was 676 pounds. Assume direct materials cost $5 per pound. Prepare a production budget for the months of April, May, and June.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Prepare a direct materials budget for April, May, and June. (Round your intermediate calculations and final answers to
the nearest whole dollar amount.)
Materials needed for production (lbs.)
Total materials requirements (lbs.)
Materials to be purchased (lbs.)
Total budgeted direct materials cost
RUIZ CO.
Direct Materials Budget
For April, May, and June
April
May
June
Transcribed Image Text:Required information
Ruiz Co. provides the following sales forecast for the next four months:
Sales (units)
April
660
The company wants to end each month with ending finished goods inventory equal to 20% of next
month's forecasted sales. Finished goods inventory on April 1 is 132 units. Assume July's budgeted
production is 690 units. In addition, each finished unit requires five pounds (lbs.) of raw materials and
the company wants to end each month with raw materials inventory equal to 20% of next month's
production needs. Beginning raw materials inventory for April was 676 pounds. Assume direct materials
cost $5 per pound.
Prepare a production budget for the months of April, May, and June.
Next month's budgeted sales (units)
Ratio of inventory to future sales
May June July
740 690 780
Units to be produced
Required units of available production
RUIZ CO.
Production Budget
For April, May, and June
April
740
20%
May
690
June
780
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