Summer Song, Co. reports the following information from its production budget: Budgeted production (units) January 50,000 February 51,400 March 51,100 April 52,500 May 53,200 June 54,000 The company desires each month’s ending raw materials inventory to equal 25% of the following month’s budgeted production needs. Each unit of output requires 6 grams of materials and each gram of material costs $7.10. The total amount of materials the firm expects to purchase in March is: a. 309,300 grams b. 307,950 grams c. 308,700 grams d. 304,500 grams e. 306,600 grams
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.
Summer Song, Co. reports the following information from its production budget:
|
|
Budgeted production (units) |
|
January |
50,000 |
|
February |
51,400 |
|
March |
51,100 |
|
April |
52,500 |
|
May |
53,200 |
|
June |
54,000 |
The company desires each month’s ending raw materials inventory to equal 25% of the following month’s budgeted production needs. Each unit of output requires 6 grams of materials and each gram of material costs $7.10. The total amount of materials the firm expects to purchase in March is:
| a. |
309,300 grams |
|
| b. |
307,950 grams |
|
| c. |
308,700 grams |
|
| d. |
304,500 grams |
|
| e. |
306,600 grams |
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