Keep Clean Manufacturers produces two products; Purline and Furline. Both products use raw material Fluoride and Glycerol. Each unit of Purline uses three (3) grams of Fluoride and five (5) litres of Glycerol. Each unit of Furline uses two (2) grams of Fluoride and four (4) litres of Glycerol. Each gram of Fluoride is expected to cost $25 and a litre of Glycerol $30. Sales and finished goods inventory budget for the year 2020 are as follows: Purline Furline Budgeted Sales 20,000 units Budgeted Sales 16,000 units Opening Inventory 3,500 units Opening Inventory 2,500 units Closing Inventory 2,000 units Closing Inventory 1,500 units Selling Price $300 Selling Price $350 As at January 1, 2020, opening inventories of raw material are 800 grams of Fluoride and 1,000 litres of Glycerol. At the end of 2020, the company plans to hold 2,000 grams of fluoride and 1,800 litres of Glycerol. The warehouse and stores managers have suggested that a provision should be made for damages and deterioration of items held in store, as follows. Products Purline Loss of 60 units Furline Loss of 70 units Raw Materials Fluoride Loss of 200 grams Glycerol Loss of 120 liters Required: a. Prepare the following budgets for both products for the year 2020: (iii) Direct raw material usage (iv) Direct raw material purchase
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 #1
Keep Clean Manufacturers produces two products; Purline and Furline. Both products use raw material Fluoride and Glycerol. Each unit of Purline uses three (3) grams of Fluoride and five (5) litres of Glycerol. Each unit of Furline uses two (2) grams of Fluoride and four (4) litres of Glycerol. Each gram of Fluoride is expected to cost $25 and a litre of Glycerol $30.
Sales and finished goods inventory budget for the year 2020 are as follows:
Purline Furline
Budgeted Sales 20,000 units Budgeted Sales 16,000 units
Opening Inventory 3,500 units Opening Inventory 2,500 units
Closing Inventory 2,000 units Closing Inventory 1,500 units
Selling Price $300 Selling Price $350
As at January 1, 2020, opening inventories of raw material are 800 grams of Fluoride and 1,000 litres of Glycerol. At the end of 2020, the company plans to hold 2,000 grams of fluoride and 1,800 litres of Glycerol.
The warehouse and stores managers have suggested that a provision should be made for damages and deterioration of items held in store, as follows.
Products
Purline Loss of 60 units
Furline Loss of 70 units
Raw Materials
Fluoride Loss of 200 grams
Glycerol Loss of 120 liters
Required:
a. Prepare the following budgets for both products for the year 2020:
(iii) Direct raw material usage
(iv) Direct raw material purchase
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