Bark Mode is considering switching to an Activity Based Costing (ABC) approach to budgeting. It has identified three cost pools. Budgeted cost and activity for each of its three activity cost pools are shown below. The company plans to produce and sell 120,000 standard units and 80,000 deluxe units. Budgeted Activity Activity Cost Pool Activity Driver Budgeted Cost Standard Deluxe Packaging Finished goods $100,000 120,000 finished units 80,000 finished units Material handling Total parts $ 50,000 600,000 total parts 650,000 total parts Production setups Total setups $120,000 6 total setups 14 total setups You have already calculated the amount of budgeted overhead that will be applied to the Standard system. Calculate the overhead cost per Standard system unit.
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.
Bark Mode is considering switching to an Activity Based Costing (ABC) approach to budgeting. It has identified three cost pools. Budgeted cost and activity for each of its three activity cost pools are shown below.
The company plans to produce and sell 120,000 standard units and 80,000 deluxe units.
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|
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Budgeted Activity |
|
|
Activity Cost Pool |
Activity Driver |
Budgeted Cost |
Standard |
Deluxe |
|
Packaging |
Finished goods |
$100,000 |
120,000 finished units |
80,000 finished units |
|
Material handling |
Total parts |
$ 50,000 |
600,000 total parts |
650,000 total parts |
|
Production setups |
Total setups |
$120,000 |
6 total setups |
14 total setups |
You have already calculated the amount of budgeted
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