Sheridan Industries has adopted the following production budget for the first 4 months of 2022. Units Month Units January 8,800 March 4,400 February 7,040 April 3,520 Month Each unit requires 2 pounds of raw materials costing $3 per pound. On December 31, 2021, the ending raw materials inventory was 3,520 pounds. Management wants to have a raw materials inventory at the end of the month equal to 20% of next month's production requirements. Prepare a direct materials purchases budget by month for the first quarter.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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![Sheridan Industries has adopted the following production budget for the first 4 months of 2022.
Month Units Month Units
January
8,800 March 4,400
February 7,040 April
3,520
Each unit requires 2 pounds of raw materials costing $3 per pound. On December 31, 2021, the ending raw materials inventory
was 3.520 pounds. Management wants to have a raw materials inventory at the end of the month equal to 20% of next month's
production requirements.
Prepare a direct materials purchases budget by month for the first quarter.
Direct Materials Per Unit
Direct Labor Time Per Unit
Total Required Direct Labor Hours
Total Cost of Direct Materials Purchases
Units to be Produced
Cost Per Pound
Direct Labor Cost Per Hour
Total Direct Labor Cost
Total Materials Required
Total Pounds Needed for Production
Beginning Direct Materials (Pounds)
Desired Ending Direct Materials (Pounds)
Direct Materials Purchases
SHERIDAN INDUSTRIES
Direct Materials Purchases Budget
$
$
January
February](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3b6573af-c4f5-423e-a1c5-ffe94738ef98%2F7ad73e8d-95e6-485e-879b-dee67b50f3be%2Fs8ij9gm_processed.jpeg&w=3840&q=75)
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