Direct Materials Purchases Budget Information Each unit of product requires 1.5 pounds of direct materials per unit, and the cost of direct materials is $2 per pound. Management prefers to maintain ending raw materials inventory equal to 30 percent of next quarter's materials needed in production. Assume raw materials inventory at the end of the fourth quarter budget period is estimated to be 41,000 pounds. Direct Labor Budget Information Each unit of product requires 0.20 direct labor hours at a cost of $12 per hour. Manufacturing Overhead Budget Information Variable overhead costs are: Indirect materials: $0.20 per unit Indirect labor: $0.15 per unit Other: $0.35 per unit Fixed overhead costs each quarter are: Salaries: $28,000 Rent: $22,000 Depreciation: $16,165 1. Prepare a direct materials purchases using the format provided. 2. Prepare a direct labor budget using the format provided.
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.
Cookies Co. is now preparing the budget for direct materials purchases, direct labor, and manufacturing
Direct Materials Purchases Budget Information
Each unit of product requires 1.5 pounds of direct materials per unit, and the cost of direct materials is $2 per pound. Management prefers to maintain ending raw materials inventory equal to 30 percent of next quarter's materials needed in production. Assume raw materials inventory at the end of the fourth quarter budget period is estimated to be 41,000 pounds.
Direct Labor Budget Information
Each unit of product requires 0.20 direct labor hours at a cost of $12 per hour.
Manufacturing Overhead Budget Information
Variable overhead costs are:
Indirect materials: $0.20 per unit
Indirect labor: $0.15 per unit
Other: $0.35 per unit
Fixed overhead costs each quarter are:
Salaries: $28,000
Rent: $22,000
1. Prepare a direct materials purchases using the format provided.
2. Prepare a direct labor budget using the format provided.
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