KuoKuts makes one product and it provided the following information to help prepare the master budget for its first four months of operations: The budgeted selling price per unit is $61. Budgeted unit sales for May, June, July, and August are 8,000, 11,000, 13,000, and 13,000 units, respectively. All sales are on credit. 35% of credit sales are collected in the month of the sale and 65% in the following month. The ending finished goods inventory equals 20% of the following month’s unit sales. The ending raw materials inventory equals 24% of the following month’s raw materials production needs. Each unit of finished goods requires 6 pounds of raw materials. The raw materials cost $9.00 per pound. 25% of raw materials purchases are paid for in the month of purchase and 75% in the following month. Assume 46,000 pounds of raw materials are needed to meet production in July, how many pounds of raw materials should be purchased in June? Note that with the above given information, you can compute the budgeted pounds of raw material needed to meet production in July, but to solve this problem, ignore your computed number of pounds of raw material needed to meet production in July and use the number given. Round your answer to the nearest whole number.
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.
KuoKuts makes one product and it provided the following information to help prepare the
- The budgeted selling price per unit is $61. Budgeted unit sales for May, June, July, and August are 8,000, 11,000, 13,000, and 13,000 units, respectively. All sales are on credit.
- 35% of credit sales are collected in the month of the sale and 65% in the following month.
- The ending finished goods inventory equals 20% of the following month’s unit sales.
- The ending raw materials inventory equals 24% of the following month’s raw materials production needs. Each unit of finished goods requires 6 pounds of raw materials. The raw materials cost $9.00 per pound.
- 25% of raw materials purchases are paid for in the month of purchase and 75% in the following month.
Assume 46,000 pounds of raw materials are needed to meet production in July, how many pounds of raw materials should be purchased in June? Note that with the above given information, you can compute the budgeted pounds of raw material needed to meet production in July, but to solve this problem, ignore your computed number of pounds of raw material needed to meet production in July and use the number given.
Round your answer to the nearest whole number.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
