Budgets: Budgets are prepared to estimate the revenue, costs, receipts and payments for the business. There are several types of budgets prepared for a manufacturing concern. Few major types of budgets prepared by each manufacturing concert are as follows: Sales budget Cash Collection budget Production budget Raw material purchase budget Cash disbursement budget Production Budget: The Production budget is prepared after preparing the sales budget to estimate the number of units of finished goods to be produced. The formula for calculation for production units is as follows: P r o d u c t i o n u n i t s = B u d g e t e d U n i t S a l e s + D e s i r e d E n d i n g F i n i s h e d G o o d s I n v e n t o r y − B e g i n n i n g F i n i s h e d G o o d s I n v e n t o r y Raw Material Purchase Budget: The Raw Material Purchase Budget is prepared after preparing the production budget to estimate the amount of Raw materials to be purchased. The formula for calculation for Raw material purchase is as follows: R a w M a t e r i a l P u r c h a s e ( P o u n d s ) = R a w m a t e r i a l p r o d u c t i o n n e e d + D e s i r e d E n d i n g R a w m a t e r i a l I n v e n t o r y − B e g i n n i n g R a w m a t e r i a l s I n v e n t o r y C o s t o f R a w M a t e r i a l p u r c h a s e = R a w m a t e r i a l p u r c h a s e ( p o u n d s ) × R a w m a t e r i a l c o s t p e r p o u n d The Cost of Raw Material Purchases for July
Budgets: Budgets are prepared to estimate the revenue, costs, receipts and payments for the business. There are several types of budgets prepared for a manufacturing concern. Few major types of budgets prepared by each manufacturing concert are as follows: Sales budget Cash Collection budget Production budget Raw material purchase budget Cash disbursement budget Production Budget: The Production budget is prepared after preparing the sales budget to estimate the number of units of finished goods to be produced. The formula for calculation for production units is as follows: P r o d u c t i o n u n i t s = B u d g e t e d U n i t S a l e s + D e s i r e d E n d i n g F i n i s h e d G o o d s I n v e n t o r y − B e g i n n i n g F i n i s h e d G o o d s I n v e n t o r y Raw Material Purchase Budget: The Raw Material Purchase Budget is prepared after preparing the production budget to estimate the amount of Raw materials to be purchased. The formula for calculation for Raw material purchase is as follows: R a w M a t e r i a l P u r c h a s e ( P o u n d s ) = R a w m a t e r i a l p r o d u c t i o n n e e d + D e s i r e d E n d i n g R a w m a t e r i a l I n v e n t o r y − B e g i n n i n g R a w m a t e r i a l s I n v e n t o r y C o s t o f R a w M a t e r i a l p u r c h a s e = R a w m a t e r i a l p u r c h a s e ( p o u n d s ) × R a w m a t e r i a l c o s t p e r p o u n d The Cost of Raw Material Purchases for July
Solution Summary: The author explains that budgets are prepared to estimate the revenue, costs, receipts and payments for the business.
Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.
Chapter 8, Problem 6F15
To determine
Concept Introduction:
Budgets:
Budgets are prepared to estimate the revenue, costs, receipts and payments for the business. There are several types of budgets prepared for a manufacturing concern. Few major types of budgets prepared by each manufacturing concert are as follows:
Sales budget
Cash Collection budget
Production budget
Raw material purchase budget
Cash disbursement budget
Production Budget:
The Production budget is prepared after preparing the sales budget to estimate the number of units of finished goods to be produced. The formula for calculation for production units is as follows:
The Raw Material Purchase Budget is prepared after preparing the production budget to estimate the amount of Raw materials to be purchased. The formula for calculation for Raw material purchase is as follows:
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Responsibility Accounting| Responsibility Centers and Segments| US CMA Part 1| US CMA course; Master Budget and Responsibility Accounting-Intro to Managerial Accounting- Su. 2013-Prof. Gershberg; Author: Mera Skill; Rutgers Accounting Web;https://www.youtube.com/watch?v=SYQ4u1BP24g;License: Standard YouTube License, CC-BY