Awash company manufactures and sells a single product that has seasonal variation in demand, with peak sells occurring in the fourth quarter. The following The followinginformation concerns operations for year 2014 – the coming year and the first two quarter of year 2015: Budget sales in units for the next six quarters are as follows: Year 2014 Quarters Year 2015 Quarters 1 2 3 4 5 6 Budgeted sales in units 4100 3800 3400 4800 3200 3000 The company has budgeted to sell its product at 100$ per unit. The company`s policy is to have a finished goods inventory at the end of each quarter equal to 10 percent of the next quarter`s sales needs. Each unit of the product requires 2 pounds of raw materials and it costs 5$ per pound to purchase The any policy is to have a raw materials inventory at the end of each quarter equal to 20 percent of the next quarter`s raw materials needs for production. The ending finished goods inventory of the product and raw materials inventory of the company were 410 units and 1628 pounds, respectively. Each unit of product requires 45 minutes of direct labor to complete. Direct laborers are paid 5$ per hour Required: Prepare sales budget for the year ending 2014 Prepare production budget for the year ending 2014 Prepare direct material purchase budget for the year ending 2014 Prepare direct labor budget for the yeat ending 2014
Awash company manufactures and sells a single product that has seasonal variation in demand, with peak sells occurring in the fourth quarter. The following The followinginformation concerns operations for year 2014 – the coming year and the first two quarter of year 2015: Budget sales in units for the next six quarters are as follows: Year 2014 Quarters Year 2015 Quarters 1 2 3 4 5 6 Budgeted sales in units 4100 3800 3400 4800 3200 3000 The company has budgeted to sell its product at 100$ per unit. The company`s policy is to have a finished goods inventory at the end of each quarter equal to 10 percent of the next quarter`s sales needs. Each unit of the product requires 2 pounds of raw materials and it costs 5$ per pound to purchase The any policy is to have a raw materials inventory at the end of each quarter equal to 20 percent of the next quarter`s raw materials needs for production. The ending finished goods inventory of the product and raw materials inventory of the company were 410 units and 1628 pounds, respectively. Each unit of product requires 45 minutes of direct labor to complete. Direct laborers are paid 5$ per hour Required: Prepare sales budget for the year ending 2014 Prepare production budget for the year ending 2014 Prepare direct material purchase budget for the year ending 2014 Prepare direct labor budget for the yeat ending 2014
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
- Awash company manufactures and sells a single product that has seasonal variation in demand, with peak sells occurring in the fourth quarter. The following The followinginformation concerns operations for year 2014 – the coming year and the first two quarter of year 2015:
- Budget sales in units for the next six quarters are as follows:
|
|
Year 2014 Quarters |
Year 2015 Quarters |
||||
|
1 |
2 |
3 |
4 |
5 |
6 |
|
|
Budgeted sales in units
|
4100
|
3800
|
3400
|
4800
|
3200 |
3000 |
- The company has budgeted to sell its product at 100$ per unit.
- The company`s policy is to have a finished goods inventory at the end of each quarter equal to 10 percent of the next quarter`s sales needs.
- Each unit of the product requires 2 pounds of raw materials and it costs 5$ per pound to purchase
- The any policy is to have a raw materials inventory at the end of each quarter equal to 20 percent of the next quarter`s raw materials needs for production.
- The ending finished goods inventory of the product and raw materials inventory of the company were 410 units and 1628 pounds, respectively.
- Each unit of product requires 45 minutes of direct labor to complete. Direct laborers are paid 5$ per hour
Required:
- Prepare sales budget for the year ending 2014
- Prepare production budget for the year ending 2014
- Prepare direct material purchase budget for the year ending 2014
- Prepare direct labor budget for the yeat ending 2014
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