BOBA Company budgeted sales of 400,000 calculators at P40 per unit last year. Variable manufacturing costs were budgeted at P16 per unit, and fixed manufacturing costs at P10 per unit. A special order for 40,000 calculators at P23 each was received by BOBA in March. BOBA has sufficient plant capacity to manufacture the additional quantity without incurring any additional fixed manufacturing costs. Acceptance of the special order would not affect BOBA’s normal sales and no selling expenses would be incurred. What would be the effect (increase/decrease) on net operating income if the special order were incur accepted?
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.
BOBA Company budgeted sales of 400,000 calculators at P40 per unit last year. Variable
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
