Prepare the cash payments budget for direct materials purchases for the months of January, February, and March, as well as a summary for the first quarter. Birdfeeders Unlimited makes backyard birdfeeders. The company sells the birdfeeders to home improvement stores. $15 Sales price per birdfeeder 1.5 Board feet of wood required for each birdfeeder $4 Cost per board foot (actual) 10% Desired ending wood inventory stated as a percentage of next month’s production requirements 20% Desired ending finished goods inventory (finished birdfeeders) stated as a percentage of next month’s sales $550,000 Total cost of direct materials purchases in December 45% of direct materials purchases are paid in the month of purchase 55% of direct materials purchases are paid in the month after 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.
Prepare the
| Birdfeeders Unlimited makes backyard birdfeeders. The company sells the birdfeeders to home improvement stores. | ||||||||||
| $15 | Sales price per birdfeeder | |||||||||
| 1.5 | Board feet of wood required for each birdfeeder | |||||||||
| $4 | Cost per board foot (actual) | |||||||||
| 10% | Desired ending wood inventory stated as a percentage of next month’s production requirements | |||||||||
| 20% | Desired ending finished goods inventory (finished birdfeeders) stated as a percentage of next month’s sales | |||||||||
| $550,000 | Total cost of direct materials purchases in December | |||||||||
| 45% | of direct materials purchases are paid in the month of purchase | |||||||||
| 55% | of direct materials purchases are paid in the month after purchase |
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