Atten’tive Manufacturing Company provided their annual manufacturing overhead budget for its Master Budget for 2022. The details were captured below: Variable overhead costs Indirect labor $600,000 Indirect materials 120,000 Factory supplies 60,000 Total variable 780,000 Fixed overhead costs Depreciation 240,000 Supervision 120,000 Property taxes 96,000 Total fixed 456,000 Total costs $ 1,236,000 The relevant range for monthly activity is expected to be between 8,000 and 12,000 direct labor hours
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.
Question 2 Part B
Atten’tive Manufacturing Company provided their annual manufacturing
Variable overhead costs
Indirect labor $600,000
Indirect materials 120,000
Factory supplies 60,000
Total variable 780,000
Fixed overhead costs
Supervision 120,000
Property taxes 96,000
Total fixed 456,000
Total costs $ 1,236,000
The relevant range for monthly activity is expected to be between 8,000 and 12,000 direct labor hours.
Required:
(a) Prepare a flexible budget for a monthly activity level of 8,000 and 9,000 direct labor hours only.
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