ABC Corporation's master budget calls for the production of 5,000 units of product monthly. The master budget includes indirect labor of P144,000 annually; ABC considers indirect labor to be a variable cost. During the month of May, 4,500 units of product were produced, and indirect labor costs of P10,100 were incurred. A performance report utilizing flexible budgeting would report a budget variance for indirect labor of a. P1,900 unfavorable b. P1,900 favorable c. P700 unfavorable d. P700 favorable
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.
ABC Corporation's
a. P1,900 unfavorable
b. P1,900 favorable
c. P700 unfavorable
d. P700 favorable
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