Favor Company budgeted the following amounts: Variable costs of production: Direct materials 6 pounds @ $1.25 per pound Direct labor 0.75 hours @ $16.00 per hour Variable overhead 0.75 hours @ $2.65 per hour Fixed overhead: Materials handling $9,000 Depreciation $2,300 Required: Prepare a flexible budget for 1,500 units, 1,800 units and 2,100 units.
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.
Favor Company budgeted the following amounts:
| Variable costs of production: | ||
| Direct materials | 6 pounds @ $1.25 per pound | |
| Direct labor | 0.75 hours @ $16.00 per hour | |
| Variable |
0.75 hours @ $2.65 per hour | |
| Fixed overhead: | ||
| Materials handling |
$9,000
|
|
|
$2,300
|
||
Required: Prepare a flexible budget for 1,500 units, 1,800 units and 2,100 units.
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