Annie's Homemade prepares a direct materials budget for its ice cream base, which is the foundational component of all ice cream flavors. It includes ingredients such as whole milk, heavy cream, and sugar that provide a "blank canvas" for creating create specific flavors. The company buys ice cream base from a supplier for $62 per case, each of which contains two 2.5-gallon bladders. Each 2.5- gallon bladder produces an average of 80 servings of ice cream. The company always maintains ending inventories equal to 20% of next quarter's production needs. The estimated quarterly production (in servings) for next year are as follows: Budgeted production in servings Required: Prepare a direct materials budget by quarter and in total for next year. Servings per case Total cases needed Quarter 1 Quarter 2 13,200 20,000 Cases to be purchased Cost per case Cost of cases to be purchased 2 Quarter 3 30,000 Quarter Quarter 4 15,200 34 Year 34
Annie's Homemade prepares a direct materials budget for its ice cream base, which is the foundational component of all ice cream flavors. It includes ingredients such as whole milk, heavy cream, and sugar that provide a "blank canvas" for creating create specific flavors. The company buys ice cream base from a supplier for $62 per case, each of which contains two 2.5-gallon bladders. Each 2.5- gallon bladder produces an average of 80 servings of ice cream. The company always maintains ending inventories equal to 20% of next quarter's production needs. The estimated quarterly production (in servings) for next year are as follows: Budgeted production in servings Required: Prepare a direct materials budget by quarter and in total for next year. Servings per case Total cases needed Quarter 1 Quarter 2 13,200 20,000 Cases to be purchased Cost per case Cost of cases to be purchased 2 Quarter 3 30,000 Quarter Quarter 4 15,200 34 Year 34
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:Annie's Homemade prepares a direct materials budget for its ice cream base, which is the foundational component of all ice cream
flavors. It includes ingredients such as whole milk, heavy cream, and sugar that provide a "blank canvas" for creating create specific
flavors. The company buys ice cream base from a supplier for $62 per case, each of which contains two 2.5-gallon bladders. Each 2.5-
gallon bladder produces an average of 80 servings of ice cream. The company always maintains ending inventories equal to 20% of
next quarter's production needs.
The estimated quarterly production (in servings) for next year are as follows:
Quarter 1 Quarter 2
13,200
20,000
Budgeted production in servings
Required:
Prepare a direct materials budget by quarter and in total for next year.
Servings per case
Total cases needed
Cases to be purchased
Cost per case
Cost of cases to be purchased
1
2
Quarter 3
30,000
Quarter
3
Quarter 4
15,200
4
34
Year
34
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