Ramos Co. provides the following sales forecast and production budget for the next four months. April May June July Sales (units) 580 660 610 680 Budgeted production (units) 520 650 620 620 The company plans for finished goods inventory of 200 units at the end of June. In addition, each finished unit requires 5 pounds of direct materials and the company wants to end each month with direct materials inventory equal to 30% of next month’s production needs. Beginning direct materials inventory for April was 780 pounds. Direct materials cost $2 per pound. Each finished unit requires 0.40 hours of direct labor at the rate of $24 per hour. The company budgets variable overhead at the rate of $28 per direct labor hour and budgets fixed overhead of $8,800 per month. RAMOS CO. Direct Materials Budget For April, May, and June April May June Budget production (units) 520 650 620 units Materials needed for production (lbs.) 2,600 3,250 3,100 lbs. Total materials requirements (lbs.) 0 Materials to be purchased (lbs.) 0 0 0 Materials price per pound Budgeted cost of direct materials purchases Prepare a direct labor budget for April, May, and June. (Enter your direct labor hours (hrs.) per unit in two decimal places.) RAMOS CO. Direct Labor Budget For April, May, and June April May June Budgeted production (units) 520 650 620 units Total labor hours needed Budgeted direct labor cost Prepare a factory overhead budget for April, May, and June. RAMOS CO. Factory Overhead Budget For April, May, and June April May June Total labor hours needed Budgeted variable overhead Budgeted fixed overhead Total budgeted factory overhead
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.
Ramos Co. provides the following sales
| April | May | June | July | |||||
| Sales (units) | 580 | 660 | 610 | 680 | ||||
| Budgeted production (units) | 520 | 650 | 620 | 620 | ||||
The company plans for finished goods inventory of 200 units at the end of June. In addition, each finished unit requires 5 pounds of direct materials and the company wants to end each month with direct materials inventory equal to 30% of next month’s production needs. Beginning direct materials inventory for April was 780 pounds. Direct materials cost $2 per pound. Each finished unit requires 0.40 hours of direct labor at the rate of $24 per hour. The company budgets variable
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Prepare a direct labor budget for April, May, and June. (Enter your direct labor hours (hrs.) per unit in two decimal places.)
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Prepare a factory overhead budget for April, May, and June.
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