Answer:
To prepare a materials budget for producing 100 units, you'll need to gather the following information:
Material Requirements per Unit: The amount of each raw material needed to produce one unit.
Target Production Quantity: The number of units you plan to produce (in this case, 100 units).
Opening Inventory: The quantity of materials you have in stock at the beginning of the period.
Desired Ending Inventory: The quantity of materials you want to have in stock at the end of the period.
Material Prices: The cost per unit of each material.
Once you have this information, you can calculate the total materials required and their cost for producing the 100 units.
Here’s a general structure:
Example Information
Material A: 2 kg per unit
Material B: 3 meters per unit
Material C: 1.5 liters per unit
Inventory Information
Opening Inventory:
Material A: 50 kg
Material B: 70 meters
Material C: 40 liters
Desired Ending Inventory:
Material A: 20 kg
Material B: 40 meters
Material C: 30 liters
Material Prices
Material A: $10 per kg
Material B: $5 per meter
Material C: $8 per liter
1. Calculate Material Requirements
For Material A:
Total required = (2 kg/unit * 100 units) + Desired Ending Inventory - Opening Inventory
Total required = (200 kg) + 20 kg - 50 kg = 170 kg
For Material B:
Total required = (3 meters/unit * 100 units) + Desired Ending Inventory - Opening Inventory
Total required = (300 meters) + 40 meters - 70 meters = 270 meters
For Material C:
Total required = (1.5 liters/unit * 100 units) + Desired Ending Inventory - Opening Inventory
Total required = (150 liters) + 30 liters - 40 liters = 140 liters
2. Calculate Material Cost
For Material A:
Total cost = 170 kg * $10/kg = $1,700
For Material B:
Total cost = 270 meters * $5/meter = $1,350
For Material C:
Total cost = 140 liters * $8/liter = $1,120
3. Summarize the Materials Budget
Material Required Quantity Cost per Unit Total Cost
Material A 170 kg $10 $1,700
Material B 270 meters $5 $1,350
Material C 140 liters $8 $1,120
Total Material Cost: $4,170
This budget helps you determine the total amount of materials needed and the associated cost to produce 100 units, while considering the opening and desired ending inventories.