ABC is in the middle of the 1* quarter of 2020. Actual Jan. 1, 2020 inventory balances include 50,000 kilograms of raw materials, zero units in work-in-process and 10,000 units of finished goods. Each unit requires 2 kilograms of raw materials. ABC aims to keep 10% of raw material requirements and 10% of units to be sold as finished goods at the beginning of each quarter. Because of short manufacturing time, no work-in-process are expected. Forecasted sales are as follows: 2020 2021 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter Units to be sold 80,000 90,000 100,000 120,000 90,000
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.
If ABC plans to pay 30% of the month’s purchases during the month of purchase, 50% in the next month, and the balance two months from the month of purchase, how much would the total payments to suppliers be for the month of April?
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