When calculating direct materials purchases, the starting point should be Budgeted production.
Budgeting in business is the process of comparing a business's estimated income (money coming into the business by selling products and services) and expenses (money going out by paying expenses and bills).
A budget is defined as a plan or estimate of how much money you will need for your living expenses or for a particular purpose. An example of a budget is how much the family spends on all her expenses in a month. An example of a budget is the amount of money a person is willing to spend on a new bed.
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