FIXED COST BUDGET Fixed costs budget will be different for every organization and will depend upon what sort of resources are consumed by each entity.. Budg expects her fixed costs and her capital expenditure for the next three months to be as follows: Rent on the new workshop of $3,000 will be paid in January to cover the months of January, February and March. New machinery and tools will cost $15,000 and will be delivered and paid for in January. These new non-current assets will have an expected useful life of five years and should be depreciated on the straight line basis. . . ● She anticipates that she will receive and pay an electricity bill in March covering the period 1 January to 15 March. She expects that this bill will be for around $1,500. Budg estimates that the new workshop will use a further $300 of electricity between 16th and 31st March. Each month of operation should be allocated an equal amount of electricity cost. An invoice for business rates of $1,200 on the new workshop will be received and paid on 15th February. These rates will cover the six-month period to 30th June. The insurance company requires a payment of $1,500 on 1st January to cover all insurance costs for the whole year to 31st December. From the expenditure information above can you produce the fixed cost budget?
FIXED COST BUDGET Fixed costs budget will be different for every organization and will depend upon what sort of resources are consumed by each entity.. Budg expects her fixed costs and her capital expenditure for the next three months to be as follows: Rent on the new workshop of $3,000 will be paid in January to cover the months of January, February and March. New machinery and tools will cost $15,000 and will be delivered and paid for in January. These new non-current assets will have an expected useful life of five years and should be depreciated on the straight line basis. . . ● She anticipates that she will receive and pay an electricity bill in March covering the period 1 January to 15 March. She expects that this bill will be for around $1,500. Budg estimates that the new workshop will use a further $300 of electricity between 16th and 31st March. Each month of operation should be allocated an equal amount of electricity cost. An invoice for business rates of $1,200 on the new workshop will be received and paid on 15th February. These rates will cover the six-month period to 30th June. The insurance company requires a payment of $1,500 on 1st January to cover all insurance costs for the whole year to 31st December. From the expenditure information above can you produce the fixed cost budget?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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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.
Question
Transcribed Image Text:BUDGETING
A BUSINESS SCENARIO - STEP 5
FIXED COST BUDGET
Fixed costs budget will be different for every organization and will depend upon what sort of resources are consumed by each
entity..
Budg expects her fixed costs and her capital expenditure for the next three months to be as follows:
●
●
●
Rent on the new workshop of $3,000 will be paid in January to cover the months of January, February and March.
New machinery and tools will cost $15,000 and will be delivered and paid for in January. These new non-current assets will
have an expected useful life of five years and should be depreciated on the straight line basis.
She anticipates that she will receive and pay an electricity bill in March covering the period 1 January to 15 March. She
expects that this bill will be for around $1,500. Budg estimates that the new workshop will use a further $300 of electricity
between 16th and 31st March. Each month of operation should be allocated an equal amount of electricity cost.
An invoice for business rates of $1,200 on the new workshop will be received and paid on 15th February. These rates will cover
the six-month period to 30th June.
The insurance company requires a payment of $1,500 on 1st January to cover all insurance costs for the whole year to 31st
December.
From the expenditure information above can you
produce the fixed cost budget?
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