Farmersville Corporation has the following budgeted sales for the selected six-month period: Month January February March April May June Unit Sales 15,000 20,000 35,000 25,000 30,000 20,000 Hu There were 7,500 units of finished goods in inventory at the beginning of January. Plans are to have an inventory of finished product equal to 20 percent of the unit sales for the next month. Three pounds of materials are required for each unit produced. Each pound of material costs $20. Inventory levels for materials equal 30 percent of the needs for the next month. Materials inventory on January 1 was 5,000 pounds. Required: a. Prepare production budgets in units for February and March, b. Prepare a purchases budget in pounds and dollars for February and March.
Farmersville Corporation has the following budgeted sales for the selected six-month period: Month January February March April May June Unit Sales 15,000 20,000 35,000 25,000 30,000 20,000 Hu There were 7,500 units of finished goods in inventory at the beginning of January. Plans are to have an inventory of finished product equal to 20 percent of the unit sales for the next month. Three pounds of materials are required for each unit produced. Each pound of material costs $20. Inventory levels for materials equal 30 percent of the needs for the next month. Materials inventory on January 1 was 5,000 pounds. Required: a. Prepare production budgets in units for February and March, b. Prepare a purchases budget in pounds and dollars for February and March.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:Farmersville Corporation has the following budgeted sales for the selected six-month period:
Month
January
February
March
April
May
June
Unit Sales
15,000
20,000
35,000
25,000
30,000
20,000
Hu
There were 7,500 units of finished goods in inventory at the beginning of January. Plans are to
have an inventory of finished product equal to 20 percent of the unit sales for the next month.
Three pounds of materials are required for each unit produced. Each pound of material costs
$20. Inventory levels for materials equal 30 percent of the needs for the next month. Materials
inventory on January 1 was 5,000 pounds.
Required:
a.
Prepare production budgets in units for February and March,
b. Prepare a purchases budget in pounds and dollars for February and March.
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