Suppose a company has created the following production budget: Month Budgeted Production February 45,000 units March 75,000 units April 60,000 units May 80,000 units Each unit produced requires 4 pounds of direct materials. Management wants to have a direct materials inventory on hand at the end of each month that is 50% of the following month's production needs. January's ending inventory of direct materials is expected to be 90,000 pounds. It takes 45 minutes for an assembly line worker to produce each unit, and the assembly line workers are paid $20 per hour. How many pounds of direct materials should the company plan to purchase in February, March, and April?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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