Ernie Ernie makes bookcases and has the following standard cost per item: £ Materials 3.5 kg at £10 per kg 35 Labour 10 hours at £13 per hour 130 Variable overhead 10 hours at £3 per hour 30 195 Contribution 285 Selling price 480 Budgeted production and sales are 320 for each month; fixed overheads are budgeted at £6,400 per month. In July, the following results were recorded: Production and sales were both 5% less than but the bookcases were sold at £500 each 1,280 kg of material were used, costing £13,440 3,250 hours were worked and cost £55,220 Variable overhead was £13,800 and fixed overhead was £10,440 Produce an operating statement for the period which reconciles the budgeted and actual profit under a marginal costing system.
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.
Ernie
Ernie makes bookcases and has the following
|
|
|
£ |
|
Materials |
3.5 kg at £10 per kg |
35 |
|
Labour |
10 hours at £13 per hour |
130 |
|
Variable overhead |
10 hours at £3 per hour |
30 |
|
|
|
195 |
|
Contribution |
|
285 |
|
Selling price |
|
480 |
Budgeted production and sales are 320 for each month; fixed
In July, the following results were recorded:
Production and sales were both 5% less than but the bookcases were sold at £500 each
1,280 kg of material were used, costing £13,440
3,250 hours were worked and cost £55,220
Variable overhead was £13,800 and fixed overhead was £10,440
Produce an operating statement for the period which reconciles the budgeted and actual profit under a marginal costing system.
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