Zortek Corporation budgets production of 450 units in January and 400 units in February. Each finished unit requires five pounds of material Z, which costs $3 per pound. Each month's ending inventory of material Z should be 40% of the following month's budgeted production. The January 1 inventory has 900 pounds of material Z. Prepare a direct materials budget for January. ZORTEK CORPORATION Direct Materials Budget Units to produce Materials required per unit (Pounds) Materials needed for production (Pounds) Add: Desired ending materials inventory Total materials required (Pounds) Less: Beginning materials inventory (pounds) Materials to purchase (Pounds) Materials cost per pound Cost of direct materials purchases $ January 450 units 5 pounds 2,250 pounds pounds pounds 900 pounds (900) pounds 3 per pound

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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.