When calculating the total amount of direct supplies required, the desired closing inventory is added, and the opening inventory is subtracted.
By multiplying the cost per unit by the entire amount of raw materials to be purchased, the total budget is determined.
The second component of the master budget is the financial budgeting. The cash budget, the budgeted balance sheet, the budgeted statement of cash flows, and the budget for capital expenditures are typically included in the financial budgets. Keep in mind that the master budget and the related financial budget are one-year projections.
cost of the production. Before they can prepare a budget for direct material purchases, managers must first prepare a production budget.
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