Lubriderm Corporation has the following budgeted unit sales for the next six-month period: Month Unit Sales 90,000 June 120,000 July August September October November 210,000 150,000 180,000 120,000 There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five pounds of materials are required for each unit produced. Each pound of material costs $8 in June, $9 in July and $10 in August. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 15,000 pounds. Required: a. Prepare a Production Budgets in units for July and August. b. Prepare a Direct Material Usage Budget for July and August. c. Prepare a Direct Material Purchases Budget for July and August.
Lubriderm Corporation has the following budgeted unit sales for the next six-month period: Month Unit Sales 90,000 June 120,000 July August September October November 210,000 150,000 180,000 120,000 There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five pounds of materials are required for each unit produced. Each pound of material costs $8 in June, $9 in July and $10 in August. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 15,000 pounds. Required: a. Prepare a Production Budgets in units for July and August. b. Prepare a Direct Material Usage Budget for July and August. c. Prepare a Direct Material Purchases Budget for July and August.
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:Lubriderm Corporation has the following budgeted unit sales for the next six-month period:
Month
Unit Sales
90,000
June
120,000
July
August
September
210,000
150,000
October
180,000
November
120,000
There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have an
inventory of finished products that equal 20% of the unit sales for the next month.
Five pounds of materials are required for each unit produced. Each pound of material costs $8 in June, $9
in July and $10 in August. Inventory levels for materials are equal to 30% of the needs for the next month.
Materials inventory on June 1 was 15,000 pounds.
Required:
a. Prepare a Production Budgets in units for July and August.
b. Prepare a Direct Material Usage Budget for July and August.
c. Prepare a Direct Material Purchases Budget for July and August.
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