Chicken Coop Manufacturing, Inc. developed its annual manufacturing overhead budget for its master budget for 2023 as follows: Expected annual operating capacity Variable overhead costs Indirect labor Indirect materials Factory supplies Total variable Fixed overhead costs Depreciation Supervision Property taxes Total fixed Total costs 100,000 Direct Labor Hours $750,000 64,000 28,000 842,000 60,000 115,000 16,000 191,000 $1,033,000 The relevant range for monthly activity is expected to be between 8,000 and 12,000 direct labor hours. Instructions Prepare a flexible budget for a monthly activity level of 8,000, 9,000 and 10,000 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.
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