Tug Company makes and sells a single product. It takes 2.5 pounds of direct materials to produce one unit of this product. Budgeted production for the next four months is given below: September October November December budgeted units to be produced 27,300 59,400 35,800 77,200 The company wants to maintain monthly ending inventories of direct materials equal to 60% of the following month's production needs. The cost of direct materials is $3.25 per pound. The company is in the process of preparing a direct materials purchases budget. Calculate the cost of direct materials budgeted to be purchased in November.
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.
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