Dee and Co. is a small manufacturing business which has prepared the following monthly budgeted figures for an average month: Production Volume 15,000 units Selling Price per Unit GH¢5.50 Sales GH¢82,500 Variable Costs GH¢37,500 Fixed Costs GH¢20,000 Profit GH¢25,000 Required: a) What is the contribution per unit? b) Determine the contribution to sales ratio. c) What is the number of units Dee and Co. needs to produce and sell each month in order to break even? d) Find the sales revenue in value required to make a target profit of GH¢50,000.
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.
Dee and Co. is a small manufacturing business which has prepared the following monthly budgeted figures for an average month:
|
Production Volume |
15,000 units |
|
Selling Price per Unit |
GH¢5.50 |
|
|
|
|
Sales |
GH¢82,500 |
|
Variable Costs |
GH¢37,500 |
|
Fixed Costs |
GH¢20,000 |
|
Profit |
GH¢25,000 |
|
|
|
Required:
- a) What is the contribution per unit?
- b) Determine the contribution to sales ratio.
- c) What is the number of units Dee and Co. needs to produce and sell each month in order to break even?
- d) Find the sales revenue in value required to make a target profit of GH¢50,000.
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