Answer:
Instructions are below.
Explanation:
Giving the following information:
Budgeted production (units):
April= 442
May= 570
June= 544
July= 540
The company plans for a finished goods inventory of 160 units at the end of June.
Each finished unit requires 5 pounds of direct materials.
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 720 pounds.
Direct materials cost $2 per pound.
To calculate the direct material required for each month, we need to use the following formula:
Direct material budget (in pounds)= production + ending inventory - beginning inventory
Budgeted direct material in pounds and dollars:
April:
Direct material for production= 442*5= 2,210 pounds
Ending inventory= (570*5)*0.3= 855
Beginning inventory= (720)
Total pounds= 2,345
Total cost= 2,345*2= $4,690
May:
Direct material for production= 570*5= 2,850 pounds
Ending inventory= (544*5)*0.3= 816
Beginning inventory= (855)
Total pounds= 2,811
Total cost= 2,811*2= $5,622
June:
Direct material for production= 544*5= 2,720 pounds
Ending inventory= (540*5)*0.3= 810
Beginning inventory= (816)
Total pounds= 2,714
Total cost= 2,714*2= $5,428
July:
Direct material for production= 540*5= 2,700 pounds
Beginning inventory= (810)
Total pounds= 1,890
Total cost= 1,890*2= $3,780
