Turbon Manufacturing plans to produce 20,000 units, 24,000 units, and 30,000 units, respectively, in October, November, and December. Each of these units requires four units of part no. 879, which the company can purchase for OMR 7 each. Turbon has 35,000 units of part no. 879 in stock on September 30. Required: Prepare a direct-material purchases budget for October and November in units and Rials. Management desires to maintain an ending raw-material inventory equal to 40% of the following month's production usage
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.
Exercise
Turbon Manufacturing plans to produce 20,000 units, 24,000 units, and 30,000 units, respectively, in October, November, and December. Each of these units requires four units of part no. 879, which the company can purchase for OMR 7 each. Turbon has 35,000 units of part no. 879 in stock on September 30.
Required:
Prepare a direct-material purchases budget for October and November in units and Rials. Management desires to maintain an ending raw-material inventory equal to 40% of the following month's production usage.
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