Problem - Croy Inc. has the following projected sales for the next five months:
Month Sales in Units
April 3,500
May 3,835
June 4,560
July 4,140
August 3,990
Croy's finished goods inventory policy is to have 60 percent of the next month's sales on hand at the end of each month. Direct material costs $3.50 per pound, and each unit requires 2 pounds. Raw materials inventory policy is to have 50 percent of the next month's production needs on hand at the end of each month. Raw materials on hand at March 31 totaled 3,701 pounds.
Required:
1. Determine budgeted production for April, May, and June.
2. Determine the budgeted cost of materials purchased for April, May, and June.