Some Master Budget Components

A B C D E F G H Data Year 2 Quarter Year 3 Quarter W N 1 2 3 4 1 2 Budgeted unit sales 40,000 60,000 100,000 50,000 70,000 80,000 . Selling price per unit $8 Desired ending finished goods inventory is 30% of the budgeted unit sales of the next quarter . Finished goods inventory, beginning 12,000 units . Raw materials required to produce one unit 5 pounds Desired ending inventory of raw materials is 10% of the next quarter's production needs 10 . Raw materials inventory, beginning 23,000 pounds 11 . Raw material costs $0.80 per pound 12 13 Construct the sales budget Year 2 Quarter Year 3 Quarter 14 2 3 4 2 15 Budgeted unit sales 40,000 60,000 100,000 50,000 70,000 80,000 16 Selling price per unit 68 68 68 17 Total sales $320,000 $480,000 $800,000 $400,000 $560,000 $640,000 18 19 Construct the production budget Year 2 Quarter Year 3 Quarter 20 2 3 4 Year 2 21 Budgeted unit sales 40,000 60,000 100,000 60,000 250,000 70,000 80,000 22 Add desired ending finished goods inventory 18,000 30.000 15,000 21,000 21,000 24,000 23 Total needs 58,000 90,000 115,000 71,000 271,000 94,000 Less beginning finished goods inventory (12,000) (18,000) (30,000) (15,000 (12,000) (21,000) 25 Required production in units 46,000 72,000 85.000 56,000 259,000 73,000 26 27 Construct the raw materials purchases budget Year 2 Quarter Year 3 Quarter 2 3 4 Year 29 Required production (units) 30 Raw materials required to produce one unit (pounds) 31 Production needs (pounds) 32 Add desired ending inventory of raw materials (pounds) 33 Total needs (pounds) 34 Less beginning inventory of raw materials (pounds) 35 Raw materials to be purchased (pounds) 86 Cost of raw materials per pound 37 Cost of raw materials to be purchased 38 20