Albert’s camera shop has prepared the following flexible budget for September and is in the process of interpreting. Flexible budget Price Variance Efficiency Variance DM $60,000 $2,800 F $1,900 F DL $85,000 $6,000 U $2,000 F Variable OH $48,000 $3,000 F $7,000 U Fixed OH $55,000 $2,000 U 0 Compute the actual amount spent for direct materials? So I got 2,800 F + 1,900 F = 4,700F? Not sure what 2 favorables equal. then 60,000 + 4,700 = 64,700? Please explain what 2 favorables would equal and 2 unfavorables will equal? I confuse
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.
Albert’s camera shop has prepared the following flexible budget for September and is in the process of interpreting.
|
|
Flexible |
Price Variance |
Efficiency Variance |
|
DM |
$60,000 |
$2,800 F |
$1,900 F |
|
DL |
$85,000 |
$6,000 U |
$2,000 F |
|
Variable OH |
$48,000 |
$3,000 F |
$7,000 U |
|
Fixed OH |
$55,000 |
$2,000 U |
0 |
Compute the actual amount spent for direct materials?
So I got 2,800 F + 1,900 F = 4,700F? Not sure what 2 favorables equal.
then 60,000 + 4,700 = 64,700?
Please explain what 2 favorables would equal and 2 unfavorables will equal? I confused not sure how that works
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