Two pounds of raw materials are needed to produce one product. The desired ending balance of raw materials is 10% of the of the next month's production needs. (Refer to your answer in the 2nd attached picture). The beginning inventory of raw materials in April is 500 pounds and raw material cost per unit is P 0.50/per pound. The desired ending inventory of raw materials for June amounted to 500 points. Using the table below, prepare a raw materials purchase budget for the month of April, May and June.
Two pounds of raw materials are needed to produce one product. The desired ending balance of raw materials is 10% of the of the next month's production needs. (Refer to your answer in the 2nd attached picture). The beginning inventory of raw materials in April is 500 pounds and raw material cost per unit is P 0.50/per pound. The desired ending inventory of raw materials for June amounted to 500 points. Using the table below, prepare a raw materials purchase budget for the month of April, May and June.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
100%
Two pounds of raw materials are needed to produce one product. The desired ending balance of raw
materials is 10% of the of the next month's production needs. (Refer to your answer in the 2nd attached picture).
The beginning inventory of raw materials in April is 500 pounds and raw material cost per unit is P
0.50/per pound. The desired ending inventory of raw materials for June amounted to 500 points. Using
the table below, prepare a raw materials purchase budget for the month of April, May and June.
Transcribed Image Text:Raw Materials Purchase Budget
Аpril
May
June
Total
Required production in units
Raw materials required to produce one unit (pounds)
Production needs (pounds)
Add desired ending inventory of raw materials
(pounds)
Total needs (pounds)
Less beginning inventory of raw materials (pounds)
Raw materials to be purchased (pounds)
Cost of raw materials per pound
Cost of raw materials to be purchased
Transcribed Image Text:Imagine you are an owner of a company. Listed below are your budgeted monthly unit sales sold at P10
per unit.
March
April
May
June
July
Budgeted
Monthly Unit
2,000.00
3,000.00
4,000.00
5,000.00
4,500.00
Sales
The desired finished goods inventory balance is 20% of the budgeted monthly unit sales of the following
month. The beginning balance of finished goods inventory in April amounted to 500 units while the
desired ending balance of finished goods inventory in June amounted to 500 units. Using the table below,
prepare a production budget for the month of April, May and June.
B
D
Production Budgot
April
3,000
Particulars
May
June
Total
Budgeted unit sales
Add: Desired ending finished goods inventory
4,000
1,000
5,000
5,000
12,000
900
800
900
Total Needs
3,800
5,900
1,000
4,900
12,900
Less: Beginning finished goods inventory
Required Production in units
500
500
12,400
800
3,300
4,200
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