A purchase Budget gives the details of the purchase which must be made to meet the needs of the business. It includes all items of purchase. Such as raw materials, indirect materials and other equipments. The purchase budget for raw materials is the most important and the following factors are required to be considered in preparing this budget.
(1) Opening and closing stocks.
(2) Unfulfilled orders at the beginning of the budget period.
(3) Storage space, economic buying quantity, and financial resources.
(4) The prices to be paid.