Analysis of sales variances to develop strategies to improve its profit position is an ongoing exercise at Caribbean Productions Ltd. The company produces and sells three products, Date Prune, and Cashella. The following budgeted and actual results were extracted from the company’s records for the month of January 2017: Budgeted Results Product Total Sales $ Volume/units Price $ Contribution margin per unit $ Total contribution margin $ Date 1,200,000 600 2,000 950 570,000 Prune 1,040,000 800 1,300 620 496,000 Cashella 600,000 600 1,000 500 300,000 2,840,000 2,000 1,366,000 Actual Results Product Total Sales $ Volume/units Price $ Contribution margin per unit $ Total contribution margin $ Date 1,540,000 700 2,200 1,000 700,000 Prune 957,600 760 1,260 600 456,000 Cashella 614,400 640 960 440 281,600
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.
Budgeted Results
|
Product |
Total Sales $ |
Volume/units |
Price $ |
Contribution margin per unit $ |
Total contribution margin $ |
|
Date |
1,200,000 |
600 |
2,000 |
950 |
570,000 |
|
Prune |
1,040,000 |
800 |
1,300 |
620 |
496,000 |
|
Cashella |
600,000 |
600 |
1,000 |
500 |
300,000 |
|
|
2,840,000 |
2,000 |
|
|
1,366,000 |
Actual Results
|
Product |
Total Sales $ |
Volume/units |
Price $ |
Contribution margin per unit $ |
Total contribution margin $ |
|
Date |
1,540,000 |
700 |
2,200 |
1,000 |
700,000 |
|
Prune |
957,600 |
760 |
1,260 |
600 |
456,000 |
|
Cashella |
614,400 |
640 |
960 |
440 |
281,600 |
|
|
3,112,000 |
2,100 |
|
|
1,437,600 |
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