Company anticipates production for its second quarter to be 19,200 units in April, 24,800 units in May, and 33,200 units in June. Each unit of finished product requires four pounds of raw materials. Q Company maintains raw materials inventories equal to 25 percent of the following month’s pounds needed for production. The April 1 inventories are in line with Q Company’s inventory policy. The anticipated cost per pound in April is $7 while the anticipated cost per pound in May is $6.50. Prepare a Direct Materials Purchases Budget with columns for April and May only.
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.
Part #3: Q Company anticipates production for its second quarter to be 19,200 units in April,
24,800 units in May, and 33,200 units in June. Each unit of finished product requires four pounds
of raw materials. Q Company maintains raw materials inventories equal to 25 percent of the
following month’s pounds needed for production. The April 1 inventories are in line with Q
Company’s inventory policy. The anticipated cost per pound in April is $7 while the anticipated
cost per pound in May is $6.50. Prepare a Direct Materials Purchases Budget with columns for
April and May only.
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