The Master Budget
Essay by BackerPlanet Staff • February 17, 2019 • Business Plan • 5,981 Words (24 Pages) • 1,154 Views
The Master Budget
1. Sales Budget
2. Production Budget
3. Direct Materials Purchases Budget
4. Direct Labor Budget
5. Overhead Budget
6. Ending Finished Goods Budget
7. Cost of Goods Sold Budget
8. Selling and Administrative Expenses Budget
9. Capital Budget
10. Cash Budget
Texas Rex sells t-shirts. Expected sales for each quarter is 1000, 1200, 1500, and 2000 t-shirts at $10.00 each. They anticipate no price change.
Texas Rex, Inc.
Sales Budget
For the year ending December 31, 2018
Q1 Q2 Q3 Q4 Total
Units 1000 1200 1500 2000 5700
Unit Selling Price ___10____ ___10____ ___10_____ __10_____ _____10___
Budgeted Sales 10000 12000 15000 20000 57000
A production budget tells management how many units must be produced to satisfy anticipated sales and ending inventory needs.
Assume the company requires 20% of the next quarter’s sales in ending inventory and that beginning inventory of t-shirts for the first quarter of the year was 180.
Texas Rex, Inc.
Production Budget
For the year ending December 31, 2018
Q1 Q2 Q3 Q4 Total
Sales in Units 1000 1200 1500 2000 5700
Desired Ending Inv. ___240____ ___300____ __400______ __200_____ __200______
Total Needs 1240 1500 1900 2200 5900
Less Beginning Inv. _180______ _240______ __300______ __400_____ __180______
Units to be Produced 1060 1260 1600 1800 5720
The Direct Materials Budget tells management how much must be bought to support production and the cost of those purchases.
Plain t-shirts cost $3.00 each, and ink (for the screen printing) cost $0.20 per ounce. The factory needs one plain t-shirt and five ounces of ink for each logoed t-shirt that it produces. Texas Rex’s policy is to have 10% of the following quarter’s needs in ending inventory. The factory has 58 plain t-shirts and 390 ounces of ink on hand on January 1. At the end of the year, the desired ending inventory is 106 plain t-shirts and 530 ounces of ink.
Texas Rex, Inc.
Direct Materials Budget
For the year ending December 31, 2018
Plain t-shirts: Q1 Q2 Q3 Q4 Total
Units to be Produced 1000 1200 1500 2000 5700
Direct Materials per unit__1_____ ___1____ ___1_____ __1_____ __1______
Production Needs 1000 1200 1500 2000 5700
Desired Ending Inv. _120______ __150_____ ___200_____ ___100____ __100______
Total Needs 1120 1350 1700 2100 5800
Less Beginning Inv. __58_____ _120______ __150______ ___200____ ___58_____
Direct Materials
To be Purchased 1062 1230 1550 1900 5742
Cost per t-shirt __3_____ _3______ __3______ ____3___ _3_______
Total T-shirt Purchase
Cost 3186 3690 4650 5700 17226
Ink: Q1 Q2 Q3 Q4 Total
Units to be Produced 1000 1200 1500 2000 5700
Direct Materials per unit_5______ _5______ _5_______ __5_____ _5_______
Production Needs 5000 6000 7500 10000 28500
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