Electro Company budgets production of 450,000 transmissions in the second quarter and 520,000 transmissions in the third quarter. Each transmission requires 0.80 pounds of a key raw material. The company aims to end each quarter with an ending inventory of direct materials equal to 20% of next quarter’s budgeted materials requirements. Beginning inventory of this raw material is 72,000 pounds. Direct materials cost $1.70 per pound. Prepare a direct materials budget for the second quarter.
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.
Electro Company budgets production of 450,000 transmissions in the second quarter and 520,000 transmissions
in the third quarter. Each transmission requires 0.80 pounds of a key raw material. The company
aims to end each quarter with an ending inventory of direct materials equal to 20% of next quarter’s budgeted
materials requirements. Beginning inventory of this raw material is 72,000 pounds. Direct materials
cost $1.70 per pound. Prepare a direct materials budget for the second quarter.
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