Bodin Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are plannned for the year 20x1. Two units of raw material are required to produce each unit of finished product. January 1 December 31Raw material .......................................... 35,000 ...................................................... 45,000Work in process ..................................... 12,000 ...................................................... 12,000Finished goods ...................................... 80,000 ...................................................... 50,000 Required:1. If Bodin Company plans to sell 480,000 units during the year, compute the number of units the firm would have to manufacture during the year.2. If 500,000 finished units were to be manufactured by Bodin Company during the year, determine the amount of raw material to be purchased.
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.
Bodin Company budgets on an annual basis. The following beginning and ending inventory levels (in units) are plannned for the year 20x1. Two units of raw material are required to produce each unit of finished product.
January 1 December 31
Raw material .......................................... 35,000 ...................................................... 45,000
Work in process ..................................... 12,000 ...................................................... 12,000
Finished goods ...................................... 80,000 ...................................................... 50,000
Required:
1. If Bodin Company plans to sell 480,000 units during the year, compute the number of units the firm would have to manufacture during the year.
2. If 500,000 finished units were to be manufactured by Bodin Company during the year, determine the amount of raw material to be purchased.
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