Michael Cage Manufacturing Company sells birdhouses. The company has prepared the following forecast for the third quarter of 2010: July5,000 units August6,000 units September10,000 units Inventory of finished goods on June 30, 2010, is budgeted at 1,000 units. Management would like the desired quantity of finished goods inventory at the end of each month equal to 20 percent of next month’s budgeted sales. October’s projected sales are 12,000 units. Each completed unit of finished product requires 3 square feet of cedar at a cost of P15 per square foot. The company has determined that it needs 10 percent of next month’s raw material needs on hand at the end of each month. The cost of the direct material that should be purchased in August is: A.P329,400 B.P306,000 C.P214,800 D.P322,200
Michael Cage Manufacturing Company sells birdhouses. The company has prepared the following forecast for the third quarter of 2010: July5,000 units August6,000 units September10,000 units Inventory of finished goods on June 30, 2010, is budgeted at 1,000 units. Management would like the desired quantity of finished goods inventory at the end of each month equal to 20 percent of next month’s budgeted sales. October’s projected sales are 12,000 units. Each completed unit of finished product requires 3 square feet of cedar at a cost of P15 per square foot. The company has determined that it needs 10 percent of next month’s raw material needs on hand at the end of each month. The cost of the direct material that should be purchased in August is: A.P329,400 B.P306,000 C.P214,800 D.P322,200
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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1. Michael Cage Manufacturing Company sells birdhouses. The company has prepared the following forecast for the third quarter of 2010:
July5,000 units
August6,000 units
September10,000 units
Inventory of finished goods on June 30, 2010, is budgeted at 1,000 units. Management would like the desired quantity of finished goods inventory at the end of each month equal to 20 percent of next month’s budgeted sales. October’s projected sales are 12,000 units.
Each completed unit of finished product requires 3 square feet of cedar at a cost of P15 per square foot.
The company has determined that it needs 10 percent of next month’s raw material needs on hand at the end of each month.
The cost of the direct material that should be purchased in August is:
A.P329,400
B.P306,000
C.P214,800
D.P322,200
Please lend me a comprehensive solution. Thanks a lot!
Please lend me a comprehensive solution. Thanks a lot!
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