A company manufactures and sells a single product. The following data have been extracted from the current year’s budget. Sales and production (units) 5,000 Variable cost per unit $50 Fixed cost per unit $70 C/S (contribution/sales) ratio 75% The selling price per unit for next year is budgeted to increase by 8%, whereas both the variable cost per unit and the total fixed costs are expected to increase by 12%. Calculate the number of units that should be produced and sold next year in order to achieve the same profit as in the current year.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
A company manufactures and sells a single product. The following data have been extracted from the current year’s budget. Sales and production (units) 5,000 Variable cost per unit $50 Fixed cost per unit $70 C/S (contribution/sales) ratio 75% The selling price per unit for next year is budgeted to increase by 8%, whereas both the variable cost per unit and the total fixed costs are expected to increase by 12%. Calculate the number of units that should be produced and sold next year in order to achieve the same profit as in the current year.
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