The sales budget for the period January to April 2020. The production budget January to April 2020. The direct raw materials usage budget for January to April 2020. The raw material purchase budget for January to April 2020.
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 information was extracted from the books of APEX Ltd during 2020. The company produces two products, Natural life and physical life.
Sales
|
Details |
January |
February |
March |
April |
Total |
|
Natural life |
1,800 |
2,200 |
3,200 |
2,500 |
9,700 |
|
Physical life |
2,200 |
1,700 |
1,500 |
2,700 |
8,100 |
Notes:
- The ending stock of finished goods each month is to be held equal to 20% of the forecasted sales for the next month.
- Raw material stocks at the end of each month are to be held at a level equal to twenty-five (25%) percent of the sales for that month. Sales for December 31, 2019 were Natural life 3,000 units; and Physical life 2,600 units.
- To make one unit of Natural life, five (5) units of raw material X12 are used, while four (4) units of raw material Z100 are used to make one unit of Physical life
- During 2020 the company sold one unit of Natural life for $650 and one unit of Physical life for $775.
- Budgeted sales for May 2020 were 2,400 units of Natural life and 2,000 units of Physical life.
- One unit of X12 was purchased for $42; while one unit of Z100 was bought for $26.
Required:
- The sales budget for the period January to April 2020.
- The production budget January to April 2020.
- The direct raw materials usage budget for January to April 2020.
- The raw material purchase budget for January to April 2020.
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