Makers Ltd. manufactures and sells two products, Abba and Baba. In July 2018 Makers’ Budget Department gathered the following data in order to prepare the individual budgets in the master budget for 2019: 2019 Projected Sales: Product Unit Price Abba 80,000 $ 190 Baba 60,000 $ 270 2019 Inventories in Units: Expected Target: Product January 1, 2019 December 31, 2019 Abba 22,000 26,000 Baba 9,000 10,000 To produce 1 unit of Abba and Baba, the following direct materials are used: Direct Material Unit Abba Baba A Pounds 5 6 B Pounds 3 4 C Each 0 1 Projected data for 2019 with respect to direct materials are as follows: Direct Material Purchase Price: Target Inventories January 1, 2019 December 31, 2019 A $14 33,000 pounds 37,000 pounds B $ 6 28,000 pounds 30,000 pounds C $ 4 6,000 units 7,000 units Projected direct manufacturing labor requirements and rates for 2019 are as follows: Product Hours per Unit Rate per Hour Abba 3 $14 Baba 4 $18 Manufacturing overhead is allocated at the rate of $20 per direct manufacturing labor-hour. Required: 1) Prepare the following budgets for 2019: a) Revenue budget (in dollars)
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.
Makers Ltd. manufactures and sells two products, Abba and Baba. In July 2018 Makers’
Budget Department gathered the following data in order to prepare the individual budgets in
the
2019 Projected Sales:
Product Unit Price
Abba 80,000 $ 190
Baba 60,000 $ 270
2019 Inventories in Units:
Expected Target:
Product January 1, 2019 December 31, 2019
Abba 22,000 26,000
Baba 9,000 10,000
To produce 1 unit of Abba and Baba, the following direct materials are used:
Direct Material Unit Abba Baba
A Pounds 5 6
B Pounds 3 4
C Each 0 1
Projected data for 2019 with respect to direct materials are as follows:
Direct Material Purchase Price:
Target Inventories
January 1, 2019 December 31, 2019
A $14 33,000 pounds 37,000 pounds
B $ 6 28,000 pounds 30,000 pounds
C $ 4 6,000 units 7,000 units
Projected direct manufacturing labor requirements and rates for 2019 are as follows:
Product Hours per Unit Rate per Hour
Abba 3 $14
Baba 4 $18
Manufacturing overhead is allocated at the rate of $20 per direct manufacturing labor-hour.
Required:
1) Prepare the following budgets for 2019:
a) Revenue budget (in dollars)
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