Required: Compute for the following: 1. Number of units of materials needed for production in the first quarter. 2. The desired inventory of materials at the end of the budget year. 3. The number of units of materials to be purchased in the third quarter. 4. The amount of purchases in the second quarter. 5. The total amount paid for materials purchases at the end of 2023. The production budget for the year 2023 of Mahogany Corporation per quarter is given as follows: First quarter 26,000 Second quarter 32,000 Third quarter 34,000 Fourth quarter 44,000 For every one unit of its product, 5 units of materials are needed. Materials are purchased at P6 per unit. Materials inventory at the end of each quarter is maintained at 20% of next quarter’s production requirements. For the first quarter of the year 2024, it is estimated that production requirements will be 30,000 units of materials. Accounts payable at the beginning of 2023 was projected to be P48,000. It is estimated that 75% of the purchases will be paid in the quarter of purchase, while the balance is paid in the next quarter.
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.
Required: Compute for the following:
1. Number of units of materials needed for production in the first quarter.
2. The desired inventory of materials at the end of the budget year.
3. The number of units of materials to be purchased in the third quarter.
4. The amount of purchases in the second quarter.
5. The total amount paid for materials purchases at the end of 2023.
The production budget for the year 2023 of Mahogany Corporation per quarter is given as follows:
| First quarter | 26,000 |
| Second quarter | 32,000 |
| Third quarter | 34,000 |
| Fourth quarter | 44,000 |
For every one unit of its product, 5 units of materials are needed. Materials are purchased at P6 per unit. Materials inventory at the end of each quarter is maintained at 20% of next quarter’s production requirements. For the first quarter of the year 2024, it is estimated that production requirements will be 30,000 units of materials.
Accounts payable at the beginning of 2023 was projected to be P48,000. It is estimated that 75% of the purchases will be paid in the quarter of purchase, while the balance is paid in the next quarter.
Step by step
Solved in 3 steps
