The direct materials budget:

Question

Quizplus · Accepted Answer

The direct materials budget must provide for desired ending inventory as well as production in order to ensure that there are enough materials on hand to meet production needs without excess inventory buildup. Beginning with this budget allows for accurate forecasting of material needs and can influence other budgets such as production and cash budgets. However, it is not necessarily completed before the cash budget and may not be accompanied by a schedule of cash collections.

The Direct Materials Budget