Exercise 7-7 (Algo) Manufacturing: Direct materials budget LO P1 Rida Incorporated is preparing its direct materials budget for the second quarter. It budgets production of 242,000 units in the second quarter and 54,500 units in the third quarter. Each unit requires 0.60 pound of direct material, priced at $177 per pound. Starting with the second quarter, the company plans to end each quarter with an ending inventory of materials equal to 40% of next quarter's budgeted direct materials required. Raw material inventory is 58,080 pounds at the beginning of the second quarter. Prepare a direct materials budget for the second quarter. Note: Enter "per unit" answers in two decimal places. Units to produce RIDA INCORPORATED Direct Materials Budget Materials needed for production (pounds) Total materials required Materials to purchase (pounds) Cost of direct materials purchases Second Quarter 242,000 units

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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. 

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