Question

Check my work Check My Work button is now enabled5Item 2Item 2 2.5 points Zira Co. reports the following production budget for the next four months. April May June July Production (units) 714 755 747 727 Each finished unit requires five pounds 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 714 pounds. Assume direct materials cost $6 per pound. Prepare a direct materials budget for April, May, and June. (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

Answer 1

ZIRA CO.
Direct Material Budget
	April	May	June
Budgeted Production (units)	714	755	747
Materials requirement per unit	5	5	5
Materials needed for production (lbs)	3,570	3,775	3,735
Budgeted ending inventory (lbs)	755	747	727
Total materials requirement (lbs)	4,325	4,522	4,462
Less: Begining Inventory (lbs)	714	755	747
Materials to be purchased (lbs)	3,611	3,767	3,715
Cost per lb.	$6	$6	$6
Total Budgeted Direct Materials Cost	$21,666	$22,602	$22,290

i) Budgeted ending inventory = 20% * Next month materials needed for production.

Caclculation for June budgeted ending inventory = 20% * [727 * 5] = 20% * 3,635 = 727

ii) Begining Inventory is the ending inventory of the previous month.