Everton Furniture Company produces two kinds of chairs: an oak model and a chestnut wood model. The oak model sells for R60 and the chestnut wood model sells for R100. The variable expenses are as follows: Oak Chestnut Variable production costs per unit R30 R35 Variable selling & admin. expenses per unit R6 R5 Expected sales in units next year are: 5 000 oak chairs and 1 000 chestnut chairs. Fixed expenses are budgeted at R135,000 per year. The yearly break-even point in total sales for the expected sales mix is: A. R500 000 B. R270 000 C. R300 000 D. R485 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.
Everton Furniture Company produces two kinds of chairs: an oak model and a chestnut wood model. The oak model sells for R60 and the chestnut wood model sells for R100. The variable expenses are as follows:
|
|
Oak |
Chestnut |
|
Variable production costs per unit |
R30 |
R35 |
|
Variable selling & admin. expenses per unit |
R6 |
R5 |
Expected sales in units next year are: 5 000 oak chairs and 1 000 chestnut chairs. Fixed expenses are budgeted at R135,000 per year. The yearly break-even point in total sales for the expected sales mix is:
| A. |
R500 000 |
|
| B. |
R270 000 |
|
| C. |
R300 000 |
|
| D. |
R485 000 |
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