Gardner Corporation manufactures skateboards and is in the process of preparing next year's budget. The pro forma income statement for the current year is presented below. Sales $ 1,500,000 Cost of sales: Direct Material $ 250,000 Direct labor 150,000
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.
Gardner Corporation manufactures skateboards and is in the process of preparing next year's budget. The pro forma income statement for the current year is presented below.
| Sales | $ | 1,500,000 | |||
| Cost of sales: | |||||
| Direct Material | $ | 250,000 | |||
| Direct labor | 150,000 | ||||
| Variable |
75,000 | ||||
| Fixed Overhead | 100,000 | 575,000 | |||
| Gross Profit | $ | 925,000 | |||
| Selling and G&A | |||||
| Variable | 200,000 | ||||
| Fixed | 250,000 | 450,000 | |||
| Operating Income | $ | 475,000 | |||
The break-even point (rounded to the nearest dollar) for Gardner Corporation for the current year is:
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