Chapter 8, Problem 12E

Preparing Production, Raw Materials Purchases Budgets
Croy Inc. has the following projected sales for the next five months:

Croy finished goods inventory policy is to have 60 percent of the next month’s sales on hand at the end of each month. Direct materialcosts $3.10 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month’s productionneeds on hand at the end of each month. Raw materials on hand at March 31 totaled 3,865 pounds.
Required:
1. Prepare a production budget for April, May, and June.
2. Prepare a Raw Materials purchases budget for April and May.