Flexible Budget In an attempt to improve budgeting, the controller for Engersol, Inc., has developed a flexible budget for overhead costs. Engersol, Inc., makes two types of products, commercial floor cleaners and household floor cleaners. The company expects to produce 300,000 units of the commercial cleaner and 120,000 units of the household cleaner during the coming year. The commercial cleaner requires 0.04 direct labor hour per unit, and the household cleaner requires 0.06. The controller has developed the following cost formulas for each of the four overhead items: Cost Formula Maintenance $34,300 + $1.25 DLH Power $0.50 DLH Indirect labor $68,200 + $2.30 DLH Rent $31,700 At the end of the year, Engersol, Inc., actually produced 310,000 units of the commercial cleaner and 115,000 of the deluxe model. The actual overhead costs incurred were: Maintenance $ 57,200 Power 9,710 Indirect labor 116,740 Rent 31,700 Required: Prepare a performance report for the period. If there is no variance, enter "0" for the amount and select "NA" in the last column. Engersol, Inc.Performance ReportFor the Year Ended December 31 blank Actual Budget Variance blank DLH for units produced - Select - - Select - - Select - Production costs: blank blank blank blank $- Select - $- Select - $- Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - Total $- Select - $- Select - $- Select -
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.
Flexible Budget
In an attempt to improve budgeting, the controller for Engersol, Inc., has developed a flexible budget for
| Cost Formula | |
| Maintenance | $34,300 + $1.25 DLH |
| Power | $0.50 DLH |
| Indirect labor | $68,200 + $2.30 DLH |
| Rent | $31,700 |
At the end of the year, Engersol, Inc., actually produced 310,000 units of the commercial cleaner and 115,000 of the deluxe model. The actual overhead costs incurred were:
| Maintenance | $ 57,200 |
| Power | 9,710 |
| Indirect labor | 116,740 |
| Rent | 31,700 |
Required:
Prepare a performance report for the period. If there is no variance, enter "0" for the amount and select "NA" in the last column.
Engersol, Inc.Performance ReportFor the Year Ended December 31
| blank | Actual | Variance | blank | |
| DLH for units produced | - Select - | - Select - | - Select - |
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| Production costs: | blank | blank | blank | blank |
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$- Select - | $- Select - | $- Select - |
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- Select - | - Select - | - Select - |
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- Select - | - Select - | - Select - |
|
|
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- Select - | - Select - | - Select - |
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| Total | $- Select - | $- Select - | $- Select - |
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