Charted Ltd manufactures three types of fruit juice: Orapine, Bananago and Pinemelon. The budgeted sales prices, sales volumes and costs for the next year are as follows: Orapine Banango Pinemelon Selling price per unit (GHS) 1,600 1,800 1,400 Sales units 420 400 380 Material cost per unit (GHS) 430 500 360 Labour cost per unit (GHS) 220 240 190 Variable overheads per unit (GHS) 110 120 95 Sixty per cent of the labour costs are fixed, and forty per cent are variable. The company expects the general fixed overheads, excluding any fixed labour costs, to be GHS55,000 for the next year. Determine the margin of safety units for each product.
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.
Charted Ltd manufactures three types of fruit juice: Orapine, Bananago and Pinemelon. The budgeted sales prices, sales volumes and costs for the next year are as follows:
|
Orapine |
Banango |
Pinemelon |
|
|
Selling price per unit (GHS) |
1,600 |
1,800 |
1,400 |
|
Sales units |
420 |
400 |
380 |
|
Material cost per unit (GHS) |
430 |
500 |
360 |
|
Labour cost per unit (GHS) |
220 |
240 |
190 |
|
Variable |
110 |
120 |
95 |
Sixty per cent of the labour costs are fixed, and forty per cent are variable. The company expects the general fixed overheads, excluding any fixed labour costs, to be GHS55,000 for the next year. Determine the margin of safety units for each product.
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