a) Overheads would be under absorbed by $20 b) Overheads would be under absorbed by $80 c) Overheads would be over absorbed by $80 d) Overheads would be over absorbed by $20
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 production is 120 units and based on this capacity fixed overhead is $4 per unit. Assume that actual production was 100 units and
overheads are absorbed at the same predetermined rate of $4 per unit.
a) Overheads would be under absorbed by $20
b) Overheads would be under absorbed by $80
c) Overheads would be over absorbed by $80
d) Overheads would be over absorbed by $20
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