Using the following information, create the following budgets for January, February and March: the production budget, the direct materials budget, the direct labour budget and the overhead budget for Williams Inc., a Calgary-based motor vehicle wheel manufacturer for its new XLR tire. The marketing department thinks that it will have strong sales. It usually keeps 20% of the next quarter's sales as a target ending inventory. For new products, Williams Inc. requires a target ending inventory of 30% of the next quarter's sales. Unfortunately, they were unable to manufacture any units before the end of the current year. March 20000 30000 45000 April 25000 Jan. Feb. If Williams Inc.uses14 kg of direct materials (rubber and metal) for each wheel it manufactures at a total cost of $5.00. It pays a total of $2200 in labour wages per hour among 100 employees. It takes 30 minutes of total labour time to produce one wheel. Overhead costs are $5 for direct materials for each labour hour per month. It pays $12,000 per month in rent and insurance.
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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