Mr. Alam is the management accountant of Gallery Apex. Mr. Alam has prepared the following estimates for the upcoming fiscal year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units to be produced.... 5,000 8,000 7,000 6,000 In addition, the beginning raw materials inventory for the 1st Quarter is budgeted to be 6,000 grams and the beginning accounts payable for the 1st Quarter is budgeted to be Tk. 2,880. Each unit requires 8 grams of raw material that costs Tk. 1.20 per gram. Mr. Alam desires to end each quarter with an inventory of raw materials equal to 25% of the following quarter’s production needs. The desired ending inventory for the 4th Quarter is 8,000 grams. Management plans to pay for 60% of raw material purchases in the quarter acquired and 40% in the following quarter. Each unit requires 0.20 direct labor-hours and direct laborers are paid Tk. 11.50 per hour.
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.
Mr. Alam is the
| 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |
| Units to be produced.... | 5,000 | 8,000 | 7,000 | 6,000 |
In addition, the beginning raw materials inventory for the 1st Quarter is budgeted to be 6,000
grams and the beginning accounts payable for the 1st Quarter is budgeted to be Tk. 2,880.
Each unit requires 8 grams of raw material that costs Tk. 1.20 per gram. Mr. Alam desires to
end each quarter with an inventory of raw materials equal to 25% of the following quarter’s
production needs. The desired ending inventory for the 4th Quarter is 8,000 grams.
Management plans to pay for 60% of raw material purchases in the quarter acquired and 40%
in the following quarter. Each unit requires 0.20 direct labor-hours and direct laborers are paid
Tk. 11.50 per hour.
Answer the following questions:
a) Prepare the direct materials budget and schedule of expected cash disbursements for
purchases of materials for the upcoming fiscal year for Gallery Apex.
b) Prepare the company’s direct labor budget for the upcoming fiscal year.
Step by step
Solved in 2 steps with 1 images
