The material purchase budget is concerned with the purchase and requirement of direct materials to be made during the budget period.
While preparing the materials purchase budget, the following factors to be considered carefully:
- Estimated sales and production.
- The requirement of materials during the budget period.
- Expected changes in the prices of raw materials.
- Different stock levels, EOQ etc.
- Availability of raw materials, i.e., seasonal or otherwise.
- Availability of financial resources.
- Price trend in the market. 8. Company’s stock policy etc.