Step 3: Prepare a Manufacturing Budget

-Raw Material Budget

Consider assumption 4 while completing this critical element: The June 30 raw materials inventory is 4,600 units. The budgeted September 30 raw materials inventory is 1,980 units. Raw materials cost $7.75 per unit. Each finished unit requires 0.50 units of raw materials. Company policy calls for a given months ending raw materials inventory to equal 20% of the next months materials requirements. Consider units to be produced found in the production budget while completing this critical element.

Manufacturing Budget - contains raw materials budget, direct labor budget, and factory overhead budget

Peyton Approved

Raw Materials Budget

July, August, and September 2015

July

August

Sept.

Total

Production budget (units)

Materials requirement per unit

Materials needed for production

Add budgeted ending inventory

Total materials requirements (units)

Deduct beginning inventory (previous month ending inventory)

Materials to be purchased

Material price per unit

Total cost of direct material purchases