Master Budgeting Theory

1. What is a budget?

2. What is the benefits to be gained from budgeting

3. What is bottom-up budgeting?

4. What is top-down budgeting?

5. Why we have to make sales budget first in making master budget?

CASES

1. Master Budget

Maju Inc manufactures metal shelf. Here are estimated sales for the first quarter for next year also its beginning and ending inventory.

Sales in unit: 200,000, sales price in unit Rp 150,000, Beginning Finish Goods in unit 16,000, Ending Finish Goods in unit 24,000.

After metal shelfs are being assembled then they are painted. Here is information its Direct Material and Direct Labor: Each shelf needs 2kg of metal with purchase price of Rp 30.000/kg. Beginning Direct Material is 4,000 kg. The company required 6,000 kg in Ending Direct Material at the end of first quarter. Each shelf requires 30 minutes Direct Labor Hours with rate of Rp 10,000/hour.

Required:

a. Construct Sales Budget for first quarter

b. Construct Production Budget for first quarter

c. Construct Direct Material purchasing budget for first quarter

2. Budgeted Income Statement

Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process:

Budgeted unit sales 460

Selling price per unit $1.950

Cost per unit $1.575

Variable selling and administrasi expenses per unit $75

Fixed selling and administrasi expenses per unit $105.000

Interest expense for the year $14.000

Required: Prepare the company's budgeted income statement