evenue and production budgets
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.
| 7. Revenue and production budgets | |||||||||||
| Candy would like revenue and production projection budgets for the coming period. The following information is available | |||||||||||
| Projected Sales: | |||||||||||
| Product | Units | Price | |||||||||
| Doughnuts (Full Dozen) | 18,000 | $8.50 | |||||||||
| Coffee | 25,200 | $5.00 | |||||||||
| The following direct materials are used in the two products: | |||||||||||
| Direct Materials | Unit | Doughnuts | Coffee | Purchase price per unit | Target Inventory | ||||||
| Batter Mix | Cups | 1 | 0 | $ 0.45 | 1,200 | ||||||
| Flavors |
Ounces |
0.25 | 1 | $ 0.20 | 1,500 | ||||||
| Icing | Ounces | 2 | 0 | $ 0.21 | 2,050 | ||||||
| Coffee Beans | Ounces | 0 | 0.2 | $ 0.52 | 240 | ||||||
| *There are no units in beginning inventory for any materials. | |||||||||||
| Projected direct manufacturing labor requirements and rates are: | |||||||||||
| Product | Hours per unit | Rate per hour | |||||||||
| Doughnuts | 0.10 | $ 14.00 | |||||||||
| Coffee | 0.05 | $ 14.00 | |||||||||
| Manufacturing |
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| Required: | |||||||||||
| Based on the preceding projections and budget requirements for doughnuts and coffee, prepare the following prediction budgets: | |||||||||||
| 1. Revenue’s budget (in dollars) | |||||||||||
| 2. Production budget (in units) | |||||||||||
| 3. Direct material purchases budget (in quantities) | |||||||||||
| 4. Direct material purchases budget (in dollars) | |||||||||||
| 5. Direct manufacturing labor budget (in dollars) | |||||||||||
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