Alpha Frontier Inc. introduced a product ten years ago. The product's patent has now expired and Alpha expects a significant increase in suppliers for this product. Alpha originally sold the products at P1,500 each but competitors will likely sell it at P1,450. Last year, Alpha had actual and budgeted cost per unit of P806.67 and P783.33 respectively. If Alpha wants to maintain the profit per unit earned last year, how much should the decrease in the budgeted cost per unit be for the coming year? Last Year Budgeted -Actual P 1,175,000 P 1,210,000 1,500.00 Total Costs Units Sold 1,500.00 Cost per unit 783.33 P 806.67
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.
How much should the decrease in the budgeted cost per unit be for the coming year?
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