A manufacturing company has budgeted a manufacturing level of 100,000 units. The manufacturing unit standards are: Quantity Price Cost Raw materials 0,5 kg 20 $/kg 10 $ Direct labor 0,25 h 30 $/h 7,50 Variable FIF 0,5 kg 10 $/kg 5 Fixed FIF 0,5 kg 5 $/kg 2,50 Total 25$ Indirect manufacturing costs are charged according to the kilograms of raw materials used in manufacturing. The results for the year are: Units manufactured 105 000 Raw materials purchased 50 000 kg x 21 $/kg Raw materials used 45 000 kg Direct labor 20 000 h for a total of 650 000 $ Variable FIF 400 000 $ Fixed FIF 350 000 $ Calculate the following differences: 1) price spread for raw materials, 2) yield spread for variable manufacturing overhead, 3) volume variance for fixed manufacturing overhead.
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 manufacturing company has budgeted a manufacturing level of 100,000 units. The manufacturing unit standards are:
Quantity Price Cost
Raw materials 0,5 kg 20 $/kg 10 $
Direct labor 0,25 h 30 $/h 7,50
Variable FIF 0,5 kg 10 $/kg 5
Fixed FIF 0,5 kg 5 $/kg 2,50
Total 25$
Indirect
The results for the year are:
Units manufactured 105 000
Raw materials purchased 50 000 kg x 21 $/kg
Raw materials used 45 000 kg
Direct labor 20 000 h for a total of 650 000 $
Variable FIF 400 000 $
Fixed FIF 350 000 $
Calculate the following differences:
1) price spread for raw materials,
2) yield spread for variable manufacturing
3) volume variance for fixed manufacturing overhead.
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