Debs started manufacturing running shorts in January. Actual fixed manufacturing overheads are the same as the budgeted amount for both January and February of R330 000. In February, the number of pairs of running shorts increased by 10% over the previous month’s production. Debs considers it appropriate to calculate the fixed manufacturing overhead rate on a monthly basis, based on that month’s budgeted capacity. The actual and budgeted capacity are the same. January’s production was 5 000 pairs of running shorts. At the end of February, 1 000 pairs of shorts remained in stock. At the end of January, there were 500 pairs of running shorts in stock. There was no work-in-progress for either month. If Debs applies a FIFO system, what is the fixed manufacturing overhead expensed for February if absorption costing is used? a.
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.
Debs started manufacturing running shorts in January. Actual fixed manufacturing
R258 600
R270 000
R330 000
R266 000
R303 000
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