Gamba rajah manufactures picture frames. Sales for August are expected to be 10,000 units of various sizes. Historically, the average frame requires 4 metres of framing, 1 square metre of glass, and 2 square metres of backing. Beginning inventory includes 1,500 metre of framing, 500 square metres of glass, and 500 square metres of backing. Current prices are RM0.30 per metre of framing, RM6.00 per square metre of glass, and RM2.25 per square metre of backing. Ending inventory should be 150% of beginning inventory. Purchases are paid for in the month acquired. Required: (i) Determine the quantity of framing, glass, and backing that is to be purchased during August. (ii) Determine the total costs of direct materials for August purchases.
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.
Gamba rajah manufactures picture frames.
Sales for August are expected to be 10,000 units of various sizes. Historically, the average frame requires 4 metres of framing, 1 square metre of glass, and 2 square metres of backing. Beginning inventory includes 1,500 metre of framing, 500 square metres of glass, and 500 square metres of backing. Current prices are RM0.30 per metre of framing, RM6.00 per square metre of glass, and RM2.25 per square metre of backing.
Ending inventory should be 150% of beginning inventory.
Purchases are paid for in the month acquired.
Required:
(i) Determine the quantity of framing, glass, and backing that is to be
purchased during August.
(ii) Determine the total costs of direct materials for August purchases.
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