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How can benefit from preparing a formal budget

Assignment Help Managerial Accounting
Reference no: EM132473745

using Using the information developed below in this Submission, please write three pages discussing the following:

Question 1: Why is the preparation of a sales forecast one of the earliest steps in preparing a master budget?

Question 2: Explain at least three ways a company can benefit from preparing a formal budget.

Production Budget

Description                                       July                        August                     Sept.                      Oct

Budgeted sales units                   8,000                     8,700                   7,600                8,700

Add Desired ending inventory        3,480                      3,040                 3,480                 3,520

Calculation                               =8700*40%             =7600*40%         =8700*40%       =8800*40%

Total required units                     11,480                      11,740                11,080                12,220

Less Beg inventory                        3,200                        3,480                 3,040                 3,480

Budgeted production units               8,280                        8,260                 8,040                    8,740

Material Purchases Budget

Description                                            July                                  August                             Sept.               Oct

Budgeted production units               8,280                               8,260                         8,040            8,740

Per unit board feet required              12                                    12                               12                 12

Required board feet                         99,360                              99,120                       96,480         104,880

Calculation                                    =8280*12                          =8260*12                        =8040*12   =8740*12

Add desired ending inventory              29,736                               28,944                            31,464

Total board feet required                   129,096                               128,064                           127,944

Less Beg inventory                          29,808                                   29,736                              28,944

Budgeted purchase board feet            99,288                                  98,328                               99,000

Cost per board feet                           $0.70                                   $0.70                                 $0.70

Budgeted purchase in dollars              $69,502                                $68,830                                $69,300

Reference no: EM132473745

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