Week 6, LO 4 Demo

Week 6, LO 4 Demo - 10% of the following quarter’s...

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Week 6 Week 6 Skill Building Demonstration Problem 4 Prepare a direct material budget including a schedule of expected cash disbursements Learning Objective 4 The Direct Materials Budget A direct materials budget is prepared after the production requirements have been computed. The direct materials budget details the raw materials details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories. The required purchases of raw materials are computed as follows: Definitions At Werthers Inc, management would like to maintain ending inventories of sugar equal to
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Unformatted text preview: 10% of the following quarter’s production needs. Cash disbursements for raw materials consist of payments for purchases on account in prior periods plus any payments for purchases in the current budget period. A schedule of expected cash disbursements in prepared to show cash disbursements for raw materials for the year. At Werthers Inc., the policy is to pay 60% of purchases in the quarter in which the purchase is made and 40% in the following quarter. One bag of candy requires 10 pounds of sugar. The company has 100 pounds beginning inventory of sugar. Example...
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This note was uploaded on 04/21/2011 for the course ACTG 211 taught by Professor Staff during the Spring '08 term at Ill. Chicago.

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Week 6, LO 4 Demo - 10% of the following quarter’s...

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