Chapter 4 - Preparing Budgets

Question 1

Prepare a sales budget

Answer 1

This is the expected sales volume and is expressed in two parts:

1) Sales volume expressed in units
2) Sales value

Question 2

Prepare a production budget

Answer 2

Budgeted sales - opening inventory of finished goods + closing inventory of finished goods = budgeted production

Question 3

Prepare a materials usage budget

Answer 3

Number of units to be produced X amount of material per unit

Question 4

Prepare a materials purchases budget

Answer 4

Quantity of material (as per material usage budget) - opening inventory of raw materials + closing inventory of raw materials = budgeted material purchases

Question 5

Prepare a labour usage budget

Answer 5

Number of units to be produced X time required per unit

Question 6

Prepare a labour cost budget

Answer 6

Labour hours X hourly rate