ABC prepared flexible budgets for possible 20X1 activity levels of 115, 140, and 165 are presented below. The actual units in 20X1 were 125. Revenue was 120,000. Actual variable expenses were 32,000; semi-variable expenses were 27,500, and fixed expenses were 19,600. Units 115 140 165 Revenue 115,000 140,000 165,000 Variable (27,500) (35,000) (42,500) Semi VE (25,000) (30,000) (35,000) Fixed (20,000) (20,000) (20,000) Net income 42,500 55,000 67,500 1. Using flexible budgeting based on units, what should the ABC have earned? 2. What was earned? 3. If the flexible budget is based on sales in pesos, what should ABC have earned?
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 prepared flexible budgets for possible 20X1 activity levels of 115, 140, and 165 are presented below. The actual units in 20X1 were 125. Revenue was 120,000. Actual variable expenses were 32,000; semi-variable expenses were 27,500, and fixed expenses were 19,600.
| Units | 115 | 140 | 165 |
| Revenue | 115,000 | 140,000 | 165,000 |
| Variable | (27,500) | (35,000) | (42,500) |
| Semi VE | (25,000) | (30,000) | (35,000) |
| Fixed | (20,000) | (20,000) | (20,000) |
| Net income | 42,500 | 55,000 | 67,500 |
1. Using flexible budgeting based on units, what should the ABC have earned?
2. What was earned?
3. If the flexible budget is based on sales in pesos, what should ABC have
earned?
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