On January 1, 2020, the Rokking Company budgeted the following for the year ended December 31, 2020: 1. Sales units: First quarter 5,600; second quarter 6,600; third quarter 7,700; fourth quarter 8,300 units; First and second quarters of 2021: 8,700 units. Ending raw materials inventory: 40% of the next quarter's production requirements. Ending finished goods inventory: 30% of the next quarter's expected sales in units. Desired production for first quarter of 2021 is 8,700 units. 2. 3. 4. 3 kilograms of raw materials are needed to make each unit of finished goods. Raw materials purchased are expected to cost $3 per kilogram. Prepare a production budget and a direct materials budget by quarters for the year ended December 31, 2020.
On January 1, 2020, the Rokking Company budgeted the following for the year ended December 31, 2020: 1. Sales units: First quarter 5,600; second quarter 6,600; third quarter 7,700; fourth quarter 8,300 units; First and second quarters of 2021: 8,700 units. Ending raw materials inventory: 40% of the next quarter's production requirements. Ending finished goods inventory: 30% of the next quarter's expected sales in units. Desired production for first quarter of 2021 is 8,700 units. 2. 3. 4. 3 kilograms of raw materials are needed to make each unit of finished goods. Raw materials purchased are expected to cost $3 per kilogram. Prepare a production budget and a direct materials budget by quarters for the year ended December 31, 2020.
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:On January 1, 2020, the Rokking Company budgeted the following for the year ended December 31, 2020:
1.
Sales units: First quarter 5,600; second quarter 6,600; third quarter 7,700; fourth quarter 8,300 units; First and
second quarters of 2021: 8,700 units.
Ending raw materials inventory: 40% of the next quarter's production requirements.
3.
Ending finished goods inventory: 30% of the next quarter's expected sales in units.
4. Desired production for first quarter of 2021 is 8,700 units.
2.
3 kilograms of raw materials are needed to make each unit of finished goods. Raw materials purchased are expected to
cost $3 per kilogram.
Prepare a production budget and a direct materials budget by quarters for the year ended December 31, 2020.
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