Betty\'s Beautiful Baskets, a manufacturing business that sells baskets, wants a
ID: 2586277 • Letter: B
Question
Betty's Beautiful Baskets, a manufacturing business that sells baskets, wants a master budget prepared for the first three months of this year (January, February and March) The managers of the different departments have provided the following information The Sales Manager has projected the following sales o January o February 4,000 units o March 5,000 units 6,000 units 5,000 units 11,250 units ril o May o Projected selling price is $35.00/unit Your Production Manager gave the following information o Ending Inventory is to be 20% of next month's production needs o April's Projected Sales 5,000 units o December 20X5 Ending Inventory was 1,000 units and December unit cost was $23.50 The Manufacturing Manager has estimated the following o Each unit will require 4 grams of material o Material in Ending Inventory is 20% of next month's needs o December's Ending Material Inventory was 4,800 g o Projected cost of material: $2.50/gram The Personnel Manager has estimated that Direct Labor will be projected at: o 0.75 hours of Direct Labor per unit o Direct Labor Cost: $8.50/hourExplanation / Answer
Solution:
Part 1 – Sales Budget
Sales Budget
January
February
March
First quarter total
Budgeted Sales (Units)
5,000
4,000
6,000
15,000
Unit Selling Price
$35
$35
$35
$35
Budgeted Sales Revenue in dollars
$175,000
$140,000
$210,000
$525,000
Schedule of Expected Cash Collection
Sales
% Collected
January
February
March
First quarter total
December Sales
$150,000
20%
$30,000
January Sales
$175,000
80%
140,000
January Sales
$175,000
20%
35,000
February Sales
$140,000
80%
$112,000
February Sales
$140,000
20%
$28,000
March Sales
$210,000
80%
$168,000
Total Expected Cash Collection
$170,000
$147,000
$196,000
$513,000
Part 2 – Production Budget
In the question Ending Inventory is mentioned as 20% of next month’s production needs. It is the inventory for direct material since production needs is related to direct material.
Finished Goods Inventory is not given.
PLease advise the finished goods inventory ratio to future sales expected units to calculate this part
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Sales Budget
January
February
March
First quarter total
Budgeted Sales (Units)
5,000
4,000
6,000
15,000
Unit Selling Price
$35
$35
$35
$35
Budgeted Sales Revenue in dollars
$175,000
$140,000
$210,000
$525,000
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