ABC Company’s budgeted sales for June, July, and August are 15,800, 19,800, and 17,500 units, respectively. ABC requires 40% of the next month’s budgeted unit sales as finished goods inventory each month. Budgeted ending finished goods inventory for May is 6,320 units. Each unit that ABC Company produces uses 2 pounds of raw material. ABC requires 35% of the next month’s budgeted production as raw material inventory each month. How I calculate the number of pounds of raw material to be purchased in June? What is the number of pounds? Someone answer me this question, but the answer was incorrect, so I'm trying to understand why is incorrect. The answer was 48,016. Please, help me understand.
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.
ABC Company’s budgeted sales for June, July, and August are 15,800, 19,800, and 17,500 units, respectively. ABC requires 40% of the next month’s budgeted unit sales as finished goods inventory each month. Budgeted ending finished goods inventory for May is 6,320 units. Each unit that ABC Company produces uses 2 pounds of raw material. ABC requires 35% of the next month’s budgeted production as raw material inventory each month.
How I calculate the number of pounds of raw material to be purchased in June?
What is the number of pounds?
Someone answer me this question, but the answer was incorrect, so I'm trying to understand why is incorrect. The answer was 48,016. Please, help me understand.
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