MORGAN Merchandising is preparing its Production Budget for the 3rd Quarter of 2020. Its Sales Budget is prepared using a budgeted sales price per unit agreed upon at the beginning of the year. To help in the Production budget preparation, the following information are given: Inventories at the end of 2019 can be sold for a total of ₱225,000 at a sales price of ₱250 per unit. Production runs are only done at the start of each quarter. A minimum of 200 untis are to be maintained at the end of each quarter to serve as buffer stocks. Budgeted quantities sold for the 1st quarter of 2020 is 4,500 units. It is forecasted that the same quantities will be sold per month of each quarter. It is estimated that quantities sold will increase by 500 units at the start of each quarter. MORGAN Merchandising estimates a gross profit rate of 35%. What is the number of units to be produced for March 2020? 4,800 4,500 3,800 0
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.
MORGAN Merchandising is preparing its Production Budget for the 3rd Quarter of 2020. Its Sales Budget is prepared using a budgeted sales price per unit agreed upon at the beginning of the year. To help in the Production budget preparation, the following information are given:
- Inventories at the end of 2019 can be sold for a total of ₱225,000 at a sales price of ₱250 per unit.
- Production runs are only done at the start of each quarter.
- A minimum of 200 untis are to be maintained at the end of each quarter to serve as buffer stocks.
- Budgeted quantities sold for the 1st quarter of 2020 is 4,500 units.
- It is
forecasted that the same quantities will be sold per month of each quarter. - It is estimated that quantities sold will increase by 500 units at the start of each quarter.
- MORGAN Merchandising estimates a gross profit rate of 35%.
What is the number of units to be produced for March 2020?
-
4,800
-
4,500
-
3,800
-
0
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