Electro Company manufactures transmissions for electric cars. Management reports ending finished goods inventory for the first quarter at 72,600 units. The following unit sales are budgeted during the rest of the year: second quarter, 242,000 units; third quarter, 206,000 units; and fourth quarter, 431,000 units. Company policy calls for the ending finished goods inventory of a quarter to equal 30% of the next quarter's budgeted unit sales. Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture. ELECTRO COMPANYProduction Budget Second Quarter / Third Quarter Next period budgeted sales units / Desired ending inventory units / Total required units / Units to produce /
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.
Electro Company manufactures transmissions for electric cars. Management reports ending finished goods inventory for the first quarter at 72,600 units. The following unit sales are budgeted during the rest of the year: second quarter, 242,000 units; third quarter, 206,000 units; and fourth quarter, 431,000 units. Company policy calls for the ending finished goods inventory of a quarter to equal 30% of the next quarter's budgeted unit sales.
Prepare a production budget for both the second and third quarters that shows the number of transmissions to manufacture.
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