WellWheats, Inc. produces breakfast cereal and sells each box, or unit, for $7. The company is projecting sales of 1,000 units for the month of March. There are 30 units in the beginning inventory. Each unit requires 20 ounces of raw materials and 0.20 direct labor hours to make. The company's policy is to keep ending finished goods inventory of 10% of the current month's sales. Selling and administrative expenses for the month have been budgeted at $2,000. How many units should WellWheats produce in March?
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 information applies to the questions displayed
below.]
We discuss how to prepare the different component budgets of the
operating budget, including the sales, production, direct materials,
direct labor,
selling and administrative expense budgets. We also discuss how
to use information from all of these operating budgets to prepare a
WellWheats, Inc. produces breakfast cereal and sells each box, or unit, for $7.
The company is projecting sales of 1,000 units for the month of March. There
are 30 units in the beginning inventory. Each unit requires 20 ounces of raw
materials and 0.20 direct labor hours to make. The company's policy is to keep
ending finished goods inventory of 10% of the current month's sales. Selling and
administrative expenses for the month have been budgeted at $2,000.
How many units should WellWheats produce in March?
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