Exercise 16-38 (Algo) Flexible Budget (LO 16-2) Golden Food Products produces special-formula pet food. The company carries no inventories. The master budget calls for the company to manufacture and sell 128,000 cases at a budgeted price of $68 per case this year. The standard direct cost sheet for one case of pet food follows: Direct materials Direct labor Variable costs: Variable overhead is applied based on direct labor-hours. The variable overhead rate is $32 per direct labor-hour. The fixed overhead rate (at the master budget level of activity) is $16 per unit. All nonmanufacturing costs are fixed and are budgeted at $2.6 million for the coming year. At the end of the year, the costs analyst reported that the sales activity variance for the year was $352,000 favorable. Required: Note: Enter your answers in thousands of dollars. Total variable costs Fixed costs: (4 pounds @ $2) (0.25 hours @ $32) Total fixed costs GOLDEN FOOD PRODUCTS Flexible Budget (thousands of dollars) $ 8 8 -

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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.