Prestwich Company has budgeted production for next year as follows: Quarter First Second Third Fourth Production in units 60,000 80,000 90,000 70,000 Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 30,000 pounds of material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be: A. 82,500 pounds B. 200,000 pounds 205,000 pounds D. 165,000 pounds
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.
![Prestwich Company has budgeted production for next year as follows:
Quarter
First
Second
Third
Fourth
Production in units...
60,000
80,000
90,000
70,000
........
Two pounds of material A are required for each unit produced. The company has a policy
of maintaining a stock of material A on hand at the end of each quarter equal to 25% of
the next quarter's production needs for material A. A total of 30,000 pounds of material A
are on hand to start the year. Budgeted purchases of material A for the second quarter
would be:
A. 82,500 pounds
B. 200,000 pounds
C. 205,000 pounds
D. 165,000 pounds](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6f088a5e-cfef-400d-8a01-960086a6626c%2F2696e7bb-44a5-4b06-ac97-b040292edfa2%2F9h74cr_processed.jpeg&w=3840&q=75)
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