Crane Ltd. estimates sales for the second quarter of 2022 will be as follows. Month Units April 3,190 May 3,290 June 3,060 The target ending inventory of finished products is as follows. March 31 2,520 April 30 2,700 May 31 2,680 June 30 3,000 Two units of materials are required for each unit of finished product. Production for July is estimated at 3,310 units to start building inventory for the fall sales period. Crane’s policy is to have an inventory of raw materials at the end of each month equal to 50% of the following month’s production requirements. Raw materials are expected to cost $4 per unit throughout the period. Calculate the May raw materials purchases in dollars.
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.
Crane Ltd. estimates sales for the second quarter of 2022 will be as follows.
|
Month
|
Units
|
||
|---|---|---|---|
|
April
|
3,190 |
|
|
|
May
|
3,290 | ||
|
June
|
3,060 |
The target ending inventory of finished products is as follows.
| March 31 | 2,520 | |
| April 30 | 2,700 | |
| May 31 | 2,680 | |
| June 30 | 3,000 |
Two units of materials are required for each unit of finished product. Production for July is estimated at 3,310 units to start building inventory for the fall sales period. Crane’s policy is to have an inventory of raw materials at the end of each month equal to 50% of the following month’s production requirements.
Raw materials are expected to cost $4 per unit throughout the period.
Calculate the May raw materials purchases in dollars.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
