Define purchase budget

Question

Give a short introduction of the term ‘purchase budget’?

Answer 1

Purchase budget is a prediction of value and quantity of materials necessitated to purchase during the budget period. This budget is closely attached to the production budget. Following points are necessitated to be considered before making the purchase budget:

- Closing and Opening balances of the stocks
-Materials obtained and reserved for exact purpose
- Information already placed
-Quantity required through the production
- Costs of materials.
- Economic order quantity and storing facilities.
- Accessibility of funds