Prepare the following for the year 2020: Raw material usage budget Raw material purchase budget
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.
Fisher-Price manufactures two products, Bassinet and Swing, which use raw materials, pins and clips. One bassinet uses 4 units of pins and 3 units of clips.
One swing uses 2 units of pins and 6 units of clips.
One pin is expected to cost $7 and one clip is expected to cost $5.
Sales and finished goods inventory budget for the year 2020 are as follows:
Bassinets |
Swings |
||
Budgeted sales |
5,000 units |
Budgeted sales |
7.000 units |
Opening inventory |
1,000 units |
Opening inventory |
2,000 units |
Closing inventory |
600 units |
Closing inventory |
800 units |
Selling price |
$400 |
Selling price |
$300 |
Raw material inventory budget for the year 2020 are as follows:
Pins |
Clips |
||
Opening inventory |
2,400 units |
Opening inventory |
3,300 units |
Closing inventory |
500 units |
Closing inventory |
600 units |
The warehouse and stores managers have suggested that a provision should be made for damages and deterioration of items held in store, as follows.
Product |
|
Bassinets |
Loss of 80 units |
Swings |
Loss of 50 units |
Raw materials |
|
Pins |
Loss of 30 units |
Clips |
Loss of 20 units |
Required:
Prepare the following for the year 2020:
- Raw material usage budget
- Raw material purchase budget
![](/static/compass_v2/shared-icons/check-mark.png)
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)