DUBAI Manufacturing has established the following master flexible budget: Sales in Units 150,000 Sales Less variable expenses: Raw materials Direct labor Manufacturing overhead Selling and administrative 100,000 $1,600,000 $2,400,000 200,000 300,000 250,000 375,000 175,000 262,500 100,000 150,000 200,000 $3,200,000 400,000 500,000 350,000 200,000
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.
Q. Prepare the flexible budget.
![DUBAI Manufacturing has established the following master flexible budget:
Sales in Units
150,000
$1,600,000 $2,400,000
Sales
Less variable expenses:
Raw materials
Direct labor
Manufacturing overhead
Selling and administrative
Total variable
Contribution margin
Less fixed expenses:
Manufacturing overhead
Selling and administrative
Total fixed
Net operating income
100,000
200,000
300,000
250,000
375,000
175,000
262,500
100,000
150,000
725,000
1,087,500
875,000 1,312,500
Actual machine-hours
Units produced
300,000
300,000
240,000
240,000
540,000
540,000
$ 335,000 $ 772,500
Actual variable overhead cost
Actual fixed overhead cost
200,000
$211,680
$315,000
126,000
120,000
$3,200,000
The company uses a standard cost system in which manufacturing overhead is applied to units of
product based on machine-hours. At standard, each unit of product requires one machine-hour to
complete. The denominator level of activity is 150,000 machine-hours, or 150,000 units. Actual
data for the year were as follows:
400,000
500,000
350,000
200,000
1,450,000
1,750,000
300,000
240,000
540,000
$1,210,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fea75bc92-95ab-46f2-b094-061c6d69d90a%2F017bce67-4def-49b4-bc5e-f98e43cbdfd2%2Fegn5n9m_processed.png&w=3840&q=75)
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