Bonkowski Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit $ 97 Budgeted unit sales (all on credit): January 10,000 February 12,000 March 13,300 April 15,200 Raw materials requirement per unit of output 4 pounds Raw materials cost $ 1.00 per pound Direct labor requirement per unit of output 2.5 direct labor-hours Direct labor wage rate $ 23.00 per direct labor-hour Predetermined overhead rate (all variable) $ 9.00 per direct labor-hour Variable selling and administrative expense $ 3.10 per unit sold Fixed selling and administrative expense $ 70,000 per month Credit sales are collected: 30% in the month of the sale 70% in the following month Raw materials purchases are paid: 30% in the month of purchase 70% in the following month The ending finished goods inventory should equal 30% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs. The estimated finished goods inventory balance at the end of February is closest to:
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.
Bonkowski Corporation makes one product and has provided the following information to help prepare the
| Budgeted selling price per unit | $ | 97 |
| Budgeted unit sales (all on credit): | ||
| January | 10,000 | |
| February | 12,000 | |
| March | 13,300 | |
| April | 15,200 |
| Raw materials requirement per unit of output | 4 | pounds | |
| Raw materials cost | $ | 1.00 | per pound |
| Direct labor requirement per unit of output | 2.5 | direct labor-hours | |
| Direct labor wage rate | $ | 23.00 | per direct labor-hour |
| Predetermined |
$ | 9.00 | per direct labor-hour |
| Variable selling and administrative expense | $ | 3.10 | per unit sold |
| Fixed selling and administrative expense | $ | 70,000 | per month |
Credit sales are collected:
30% in the month of the sale
70% in the following month
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 30% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs.
The estimated finished goods inventory balance at the end of February is closest to:
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