section 2

(budget)
master budget :1)operating budget feha :a)sales budget
b)production budget
c)direct material budget
d)direct labor budget
e)manufacturing budget
2)financial budget feha: cash budget
*******************
a) sales budget
budget sales

xx 5,000

*
selling price
__________
total sales

xx $1
_________

$5,000

****************************************************
b)production budget

budget sales

xx 5,000

add: desired end. Inventory

xx 1,000

________________________

__________

Total sales

xx 6,000

Less:beg. Inventory

xx (2,000)

_______________

_________

Required production
xx 4,000
*************************************************
c)direct material budget
required production

xx 4,000

*
raw material needed per unit

xx $1

________________________

_______

production needs

xx 4,000

add:desired end. Inventory

of raw material
___________________

xx 2,000
__________

total needs

xx 6,000

less:desired beg.inventory

xx (1,000)

____________________

____________

raw materials needed

to be purchased

xx 5,000

*
cost of raw material needed
to be purchased

xx $2

________________________

________

total cost of raw material

needed to be purchased

xx 10,000

**************************************
example:9-11 page:410
el7agat d mohema 3lsan tt7l zy elmsa2l elly by7lha dr. badr w
hya (given):
- expected price selling = $10
-actual selling price = $11
-actual unit sold = 120,000
-actual production units = 130,000
-expected raw material costs = $0.9 per pound(pound=kg)

-actual raw materials costs = $0.5 per pound(pound=kg)

-actual cc =3.5
required:
1) Sales budget
2) Production budget
3) Direct material budget
Solution
f elmas2la gyblak 7aga mhema brdo w hya :
a) End. Inventory= 3,000+20% next month sales
June 30 =10,000 units.
b) End. Inventory of raw materials=1/2 following months
June 30 = 54,000 cc
1)Sales Budget
July
Budget sales

35,000

August

Sept

40,000

50,000

Total Q
125,000

*
Selling price

$10

$10

$10

$10

____________

___

_____

______

______

Total sales

350,000

400,000

500,000

1,250,000

Variance
Variance have 3 rules:
Total variance=(AQ*AP) (SQ*SP)
AQ= actual quantity
SQ=expected quantity

AP= actual price

SP= expected price

1)Total variance= (120,000*$11) (125,000*$10)

=1,320,000 1,250,000 = 70,000 [f] efficiency
=1,320,000 - 1,250,000 =70,000

[f]

Note :hna f 7aga mohma 2wy [f] mean effeciency or good

[u] mean bad

7aga klftny 1,250,000 b3taha b 1,320,000 kda 2na ksbaan

2)price variance = (AP-SP)*AQ
=($11 - $10)*120,000
= $120,000

[f] efficiency

7aga klftny $10 b3taha b $11 ksbaan

3)effeciency variance= (AQ-SQ)*SP

=(120,000 - 125,000) * $10

=(-5,000)*$10
=$50,000

[U]

hna klftna b 125,000 geet 2na b3tha b 120,000 kda 2na 5sraan f
htb2a hna [u]
**************

**************

*****************

2)Production budget
july
budget sales

35,000

august

sept.

40,000

50,000

oct.
30,000

add:desired end.
inventory

11,000

13,000

9,000

7,000

Hna 3lsan ngeeb el end. inventory mdelly given 3,000 unit+20%

next month sales
july= (40,000*20%)=8,000+3,000=11,000
august=(50,000*20%)=10,000+3,000= 13,000
sept=(30,000*20%)+3,000=6,000+3,000=9,000
oct=( 20,000*20%)+3,000=

4,000+3,000=7,000

(f oct 5dna 20,000 mn november w da given)

july

august

sept.

35,000

40,000

50,000

inventory

11,000

13,000

9,000

7,000

____________

______

______

______

_______

budget sales

oct.
30,000

add:desired end.

total needs

46,000

53,000

(10,000)

(11,000)

59,000

37,000

(13,000)

(9,000)

less:beg.
inventory
el ending

inventory hwa hwa elbegining inventory

3yny el ending bta3 year 2012 hyb2a elbeginning bta3 2013

f elms2ala mdeny july 30 = 10,000 hyb2a beg. inventory l july
july
budget sales

35,000

august

sept.

oct.

40,000

50,000

30,000

add:desired
end.inventory

11,000

13,000

9,000

7,000

___________

______

______

______

_______

total needs
less:beg.

46,000

53,000

59,000

37,000

inventory

(10,000)

(11,000)

(13,000)

(9,000)

__________

_______

_______

________

________

36,000

42,000

Required
production

46,000

28,000

*********************************************
3)direct material budget
july

august

sept

total

required
production

36,000

42,000

need per unit

___________

____

_____

46,000

124,000

*
raw material
3
_____

3
_______

Production
Needs

108,000

126,000

138,000

372,000

add:desired
end.Inventory
of raw mat.

63,000

69,000

42,000

42,000

mdyny given f elmas2ala end. inventory=1/2 following month.

July=(126,000*1/2)=63,000
August= (138,000*1/2)=69,000
Sept=28,000 bta3t october bs lazm ndrabha f elunit elly hya $3
= 28,000*3=84,000*1/2= 42,000
hna eltotal msh mgmo3 elmonths but eltotal hna hwa elending
inventory bta3 25r month w brdo f elbeginnning inventory
eltotal hykon 2wl beginning inventory bta3 2wl month

required production

july

august

sept

total

36,000

42,000

46,000

124,000

3
_____

*
raw material need
per unit

_______________

____

____

____

108,000

126,000

138,000

inventoryof raw mat.

63,000

69,000

42,000

_________________

______

production
needs

372,000

add:desired end.

______

_____

42,000
______

Total needs

171,000

less:end. inventory

195,000

(54,000)

180,000

(63,000)

414,000

(69,000)

(42,000)

end. inventory bta3 july given f elmas2ala b 54,000

required production

july

august

sept

total

36,000

42,000

46,000

124,000

*
raw material need
per unit

____________

_____

_____

____

_____

production
needs

108,000

126,000

138,000

372,000

69,000

42,000

42,000

_______

______

________

195,000

180,000

add:desired end.
inventoryof
raw mat.
__________

63,000
______

total needs

171,000

less:beg. inventory

(54,000)

________________

______

(63,000)
______

414,000

(69,000)
_______

(54,000)
______

total costs of raw

mateials needed
to be purchased

117,000

132,000

111,000

360,000

$0.9

$0.9

$0.9

$0.9

________

_____

______

_______

*
costs
_____________
total costs of
raw materials
needed to be
purchased

105,300

118,800

999,000

324,000

variance:
1)total variance=(AQ*AP) (SQ*SP)
= (130,000*$0.5*3.5) (130,000*3*$0.9)
$O.5 given actual raw materials costs
3.5 given actual cc
$3 given 1 unit = 3 cc
$0.9 given expected raw materials costs

= 227,500 351,000
= (123,500) [U] bad
Hna klftna 351,000 w b3naha b 227,500 kda e7na 5sraneen
2)price variance=(AP-SP)*AQ
=($0.5 $0.9)*130,000 * 3.5
= 182,000 [u] bad
Hna klftna $0.9 b3naha b $0.5 5sraneen
3)effeciency variance = (AQ-SQ)*SP
=[(130,000*3.5) - (130,000*3)]*$0.9
=

(445,000 390,000) *$0.9