A company that manufactures a single product has provided the following budgeted standard cost and revenue details for next year. Selling price per unit – GHS24.00; Variable manufacturing cost per unit – GHS8.60; Fixed manufacturing costs – GHS650,000; Fixed general, selling and distribution costs – GHS230,400. The company expects to sell 90,000 units of the product next year and plans to pay a sales commission of 5 per cent of the selling price. Determine the percentage by which the budgeted sales can fall before the company begins to make a loss.
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 that manufactures a single product has provided the following budgeted
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