Wright Lighting Fixtures forecasts its sales in units for the next four months as follows: March 15,000 April 17,000 May 14,500 June 13,000 Wright maintains an ending inventory for each month in the amount of two and one-half times the expected sales in the following month. The ending inventory for February (March’s beginning inventory) reflects this policy. Materials cost $7 per unit and are paid for in the month after production. Labor cost is $11 per unit and is paid for in the month incurred. Fixed overhead is $16,500 per month. Dividends of $20,900 are to be paid in May. The firm produced 14,000 units in February. Complete a production schedule and a summary of cash payments for March, April, and May. Remember that production in any one month is equal to sales plus desired ending inventory minus beginning inventory.
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.
Wright Lighting Fixtures
| March | 15,000 |
| April | 17,000 |
| May | 14,500 |
| June | 13,000 |
Wright maintains an ending inventory for each month in the amount of two and one-half times the expected sales in the following month. The ending inventory for February (March’s beginning inventory) reflects this policy. Materials cost $7 per unit and are paid for in the month after production. Labor cost is $11 per unit and is paid for in the month incurred. Fixed overhead is $16,500 per month. Dividends of $20,900 are to be paid in May. The firm produced 14,000 units in February.
Complete a production schedule and a summary of cash payments for March, April, and May. Remember that production in any one month is equal to sales plus desired ending inventory minus beginning inventory.
The budgets are prepared to estimate the requirements for the future period.
the production budget tells about the number of units to be produced during the period.
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