The following sales forecast was developed by the sales team at Park Place Manufacturing Company Ltd for the months indicated. The company produces two products Glow skincare and Snow skincare.
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.
The following sales
Sales Forecast 2018
|
Details |
Glow skincare |
Snow skincare |
|
July |
1.500 units |
2,000 units |
|
August |
2,200 units |
2,250 units |
|
September |
2,000 units |
1,900 units |
|
October |
1,400 units |
1,600 units |
|
November |
1,700 units |
1,500 units |
|
December |
1,750 units |
2,300 units |
Notes:
(i) To make one unit of Glow skincare, four (4) units of raw material F250 is used. One unit of raw material F250 costs $40. Snow skincare uses three (3) units of raw material K200 which costs $30 each.
(ii) The company has decided that raw material stocks at the end of each month should be held equivalent to fifteen percent (15%) of the budgeted sales for the month in question.
(iii) During the year, the company sold one unit of Glow skincare for $120, while one unit of Snow skincare was sold for $140.
(iv) There should be in store sufficient finished goods stock to meet thirty percent (30%) of the sales for the next month.
Required:
(a) Prepare the company’s sale budget for the period August to November 2018.
(b) Prepare the production budget for both products for the period August to November 2018.
(c) Prepare the direct raw materials usage budget for the period August to November 2018.
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