Exercise 2-Flexible budget and overhead rates: Babyl Company expects a normat capacity of 20,000 direct labor hours for March 2017. The over- bead costs under this normal capacity are as follows: Fixed costs ID 1,000,000 ID 800,000 ID 2,200,000 ID 3,000,000 ID 400,000 Variable costs ID 100 per ID 50 per DLH ID 120 per DLH Indirect labor Other costs Maintenance O per Depreciation Supplies ---- ID 20 per DLH Required: 1-Prepare flexible budget for levels of activity from 18,000 to 24,000 direct labor hours in increments of 2,000 direct labor hours. 2- Calculate standard overhead rates.
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.
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