Exercise 8-3 (Algo) Direct Materials Budget [LO8-4] Three grams of musk oil are required for each bottle of Mink Caress, a popular perfume made by a company in western Siberia. The cost of the musk oil is $2.20 per gram. Budgeted quarterly production of Mink Caress is given below for Year 2 and the first quarter of Year 3: First 72,000 Year 2 Second 102,000 Third 162,000 Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2. Fourth 112,000 Budgeted production, in bottles The inventory of musk oil at the end of a quarter must equal 20% of the following quarter's production needs. A total of 43,200 grams of musk oll will be on hand to start the first quarter of Year 2. Mink Caress Direct Materials Budget - Year 2 Year 3 First 82,000
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.
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