The production department of your company has given you the following budgeted units to be produced in the next Four months, Month Units to produce - Jan 6,000 Feb 7.000 Mar 8.000 April 8,500 NOTES Each unit requires 3 pounds of raw materials. Each pound of raw material costs $2,50. At the beginning of January, there were 3,600 pounds in inventory. Management would like to have at the end of each month inventory of materials equal to 20% of the following month's production needs in raw materials. Each unit requires 0.50 direct labor hours and direct labor-hour workers are paid $12 per hour. Required For January AND February ONLY Prepare the materials purchase and Direct Labor budgets
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.
The production department of your company has given you the following budgeted units to be produced in the next Four months,
Month Units to produce
- Jan 6,000
Feb 7.000
Mar 8.000
April 8,500
NOTES
Each unit requires 3 pounds of raw materials. Each pound of raw material costs $2,50.
At the beginning of January, there were 3,600 pounds in inventory. Management would like to have at the end of each month
inventory of materials equal to 20% of the following month's production needs in raw materials.
Each unit requires 0.50 direct labor hours and direct labor-hour workers are paid $12 per hour.
Required
For January AND February ONLY
Prepare the materials purchase and Direct Labor budgets
Step by step
Solved in 3 steps
