Vaughn Industries has adopted the following production budget for the first 4 months of 2025. Month Units Month Units January February 9,920 April 12,400 March 6,200 4,960 Each unit requires 3 pounds of raw materials costing $4 per pound. On December 31, 2024, the ending raw materials inventory was 7,440 pounds. Management wants to have a

Vaughn Industries has adopted the following production budget for the first 4 months of 2025. Month Units Month Units January February 9,920 April 12,400 March 6,200 4,960 Each unit requires 3 pounds of raw materials costing $4 per pound. On December 31, 2024, the ending raw materials inventory was 7,440 pounds. Management wants to have a

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 1PA: Lens Junction sells lenses for $45 each and is estimating sales of 15,000 units in January and...

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Concept explainers

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.

Question

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Vaughn Industries has adopted the following production budget for the first 4 months of 2025.
Month
Units Month Units
January
February 9,920 April
12,400 March 6,200
4,960
Each unit requires 3 pounds of raw materials costing $4 per pound. On December 31, 2024, the ending raw materials inventory
was 7,440 pounds. Management wants to have a raw materials inventory at the end of the month equal to 20% of next month's
production requirements.
Prepare a direct materials purchases budget by month for the first quarter.
VAUGHN INDUSTRIES
Direct Materials Purchases Budget
January
February
March

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