A manufacturing company budgets production of 800 units during June and 900 units during July. Each unit of finished goods requires 2 pounds of direct materials, at a cost of $8 per pound. The company maintains an inventory of direct materials equal to 10% of next month’s budgeted production. Beginning direct materials inventory for June is 160 pounds. Each finished unit requires 1 hour of direct labor at the rate of $14 per hour. Compute the budgeted (a) cost of direct materials purchases for June and (b) direct labor cost for June.
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.
A manufacturing company budgets production of 800 units during June and 900 units during July. Each unit
of finished goods requires 2 pounds of direct materials, at a cost of $8 per pound. The company maintains an
inventory of direct materials equal to 10% of next month’s budgeted production. Beginning direct materials
inventory for June is 160 pounds. Each finished unit requires 1 hour of direct labor at the rate of $14 per hour.
Compute the budgeted (a) cost of direct materials purchases for June and (b) direct labor cost for June.
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