Aaron's chairs is in the process of preparing a production cost budget for August. Actual costs in July for 120 chairs were: Material cost $4,860 Labor cost 2,500 Rent 1,500 Depreciation 2,500 Other fixed costs 3,200 Materials and labor are the only variable costs. If production and sales are budgeted to change to 100 chairs in August, how much is the expected total variable cost on the August budget?
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.
Aaron's chairs is in the process of preparing a production cost budget for August. Actual costs in July for 120 chairs were:
Material cost $4,860
Labor cost 2,500
Rent 1,500
Other fixed costs 3,200
Materials and labor are the only variable costs. If production and sales are budgeted to change to 100 chairs in August, how much is the expected total variable cost on the August budget?
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