Ewuarbena & Co Manufacturing Ltd have budgeted to sell these quantities of its products, Chocomix, for the coming months in 2020: January – 160,000 sachets; February – 240,000 sachets; March – 200,000 sachets; April – 400,000 sachets; and May – 150,000 sachets. The company expects to sell each sachet for GHS20. The company has decided that to avoid losing customers arising from production hold-ups it would like to maintain a finished goods inventory in the future equal to one-fifth of the following month's budgeted sales. At the beginning of January 2020, the company had finished goods inventory of 10,000 sachets.
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.
Ewuarbena & Co Manufacturing Ltd have budgeted to sell these quantities of its products, Chocomix, for the coming months in 2020: January – 160,000 sachets; February – 240,000 sachets; March – 200,000 sachets; April – 400,000 sachets; and May – 150,000 sachets. The company expects to sell each sachet for GHS20. The company has decided that to avoid losing customers arising from production hold-ups it would like to maintain a finished goods inventory in the future equal to one-fifth of the following month's budgeted sales. At the beginning of January 2020, the company had finished goods inventory of 10,000 sachets. What is total budgeted sales and production for the 2020 1st quarter ended (January – March 2020)? (show all workings clearly)
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