Flexible budget for a product as prepare by Anchor Ltd, is given below: Sales – unit 10,000 15,000 20,000 Rs. Rs. Rs. Sales 800,000 1,200,000 1,600,000 Manufacturing cost: Variable 300,000 450,000 600,000 Fixed 200,000 200,000 200,000 Total manufacturing cost 500,000 650,000 800,000 Marketing and other expenses: Variable 200,000 300,000 400,000 Fixed 160,000 160,000 160,000 Total Marketing and other exp 360,000 460,000 560,000 Operating income / (loss) (60,000) 90,000 240,000 Additional information: The budget of 20,000 units will be
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.
q3:
Flexible budget for a product as prepare by Anchor Ltd, is given below:
Sales – unit 10,000 15,000 20,000
Rs. Rs. Rs.
Sales 800,000 1,200,000 1,600,000
Variable 300,000 450,000 600,000
Fixed 200,000 200,000 200,000
Total manufacturing cost 500,000 650,000 800,000
Marketing and other expenses:
Variable 200,000 300,000 400,000
Fixed 160,000 160,000 160,000
Total Marketing and other exp 360,000 460,000 560,000
Operating income / (loss) (60,000) 90,000 240,000
Additional information:
- The budget of 20,000 units will be used for allocating the fixed manufacturing cost to units of product.
- At the end of first six months, 12,000 units have been completed and 6,000 units have been sold @ Rs.80 per unit.
- All fixed costs are budgeted and incurred uniformly throughout the year and all costs incurred, coincide with budget.
- The over or under applied fixed manufacturing cost is deferred unit the end of the year.
(Note: Don’t write Comma (,) Full stop (.) and any Rs. Signs in Answer just write in number (i.e. 10000, but not Rs.10,000))
REQUIRED:
Calculate the Gross Profit in Absorption Costing?
Step by step
Solved in 2 steps
