Hesterman Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit $ 118 Budgeted unit sales (all on credit): April 7,800 May 9,400 June 14,000 July 12,100 Raw materials requirement per unit of output 3 pounds Raw materials cost $ 3.00 per pound Direct labor requirement per unit of output 2.8 direct labor-hours Direct labor wage rate $ 25.00 per direct labor-hour Credit sales are collected: 40% in the month of the sale 60% in the following month The ending finished goods inventory should equal 40% of the following month's sales. The ending raw materials inventory should equal 20% of the following month’s raw materials production needs. If 39,720 pounds of raw materials are required for production in June, then the budgeted cost of raw material purchases for May is closest to:
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.
Hesterman Corporation makes one product and has provided the following information to help prepare the
| Budgeted selling price per unit | $ | 118 |
| Budgeted unit sales (all on credit): | ||
| April | 7,800 | |
| May | 9,400 | |
| June | 14,000 | |
| July | 12,100 |
| Raw materials requirement per unit of output | 3 | pounds | |
| Raw materials cost | $ | 3.00 | per pound |
| Direct labor requirement per unit of output | 2.8 | direct labor-hours | |
| Direct labor wage rate | $ | 25.00 | per direct labor-hour |
Credit sales are collected:
40% in the month of the sale
60% in the following month
The ending finished goods inventory should equal 40% of the following month's sales. The ending raw materials inventory should equal 20% of the following month’s raw materials production needs.
If 39,720 pounds of raw materials are required for production in June, then the budgeted cost of raw material purchases for May is closest to:
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