Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 3.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows: August 24,500 units September 23,200 units October 24,600 units November 25,800 units December 25,500 units The company wants to maintain monthly ending inventories of Jurislon equal to 25% of the following month's production needs. On July 31, this requirement was not met since only 12,700 kilograms of Jurislon were on hand. The cost of Jurislon is $26 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months. The total cost of Jurislon to be purchased in August is: $2,427,100 $2,229,500 $2,757,300 $2,627,950
Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 3.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows: August 24,500 units September 23,200 units October 24,600 units November 25,800 units December 25,500 units The company wants to maintain monthly ending inventories of Jurislon equal to 25% of the following month's production needs. On July 31, this requirement was not met since only 12,700 kilograms of Jurislon were on hand. The cost of Jurislon is $26 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months. The total cost of Jurislon to be purchased in August is: $2,427,100 $2,229,500 $2,757,300 $2,627,950
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:Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 3.5 kilograms of the raw
material Jurislon. Budgeted production of Miniwarps for the next five months is as follows:
August 24,500 units
September 23,200 units
October 24,600 units
November 25,800 units
December 25,500 units
The company wants to maintain monthly ending inventories of Jurislon equal to 25% of the following month's production
needs. On July 31, this requirement was not met since only 12,700 kilograms of Jurislon were on hand. The cost of Jurislon
is $26 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months.
The total cost of Jurislon to be purchased in August is:
$2,427,100
$2,229,500
$2,757,300
$2,627,950
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