Compute the under- or overapplied overhead for the St. Cloud plant for the year.
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.
The Gilster Company, a machine tooling firm, has several plants. One plant, located in St. Cloud, Minnesota, uses a
| Department A | Department B | ||||||
| Budgeted department overhead | |||||||
| (excludes plantwide overhead) | $ | 108,000 | $ | 329,000 | |||
| Actual department overhead | 120,000 | 344,000 | |||||
| Expected total activity: | |||||||
| Direct labor hours | 44,000 | 10,000 | |||||
| Machine-hours | 18,000 | 47,000 | |||||
| Actual activity: | |||||||
| Direct labor hours | 45,500 | 9,500 | |||||
| Machine-hours | 18,500 | 49,000 | |||||
For the coming year, the accountants at the St. Cloud plant are in the process of helping the sales force create bids for several jobs. Projected data pertaining only to job no. 110 are as follows.
| Direct materials | $ | 18,500 | |
| Direct labor cost: | |||
| Department A (2,200 hr) | 33,000 | ||
| Department B (1,200 hr) | 6,800 | ||
| Machine-hours projected: | |||
| Department A | 110 | ||
| Department B | 1,200 | ||
| Units produced | 14,000 | ||
d. Compute the under- or overapplied overhead for the St. Cloud plant for the year.
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