Exercise 7-4 Manufacturing: Direct materials budget LO P1 Hospitable Co. provides the following sales forecast for the next four months: April May June July Sales (units) 670 750 700 700 The company wants to end each month with ending finished goods inventory equal to 40% of next month's sales. Finished inventory on April 1 is Assume July's budgeted production is 700 units. In addition, each finished unit requires five pounds of raw materials and the company wants to end each month with raw materials inventory equal to 30% of next month's production needs. Beginning raw materials inventory for April was 1,053 pounds, Assume direct materials cost $4 per pound, Prepare a direct materials budget for April, May, and June. HOSPITABLE CO Direct Materials Budget For April, May, and June April May June Budgeted production (units) 702 730 700 units Materials needed for production Total materials requirements Materials to be purchased Total cost