he production supervisor of the Painting Department for Whitley Company agreed to the following monthly static budget for the upcoming year: WHITLEY COMPANY Painting Department Monthly Production Budget Wages $214,000 Utilities
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.
The production supervisor of the Painting Department for Whitley Company agreed to the following monthly static budget for the upcoming year:
| WHITLEY COMPANY Painting Department Monthly Production Budget |
|
| Wages | $214,000 |
| Utilities | 20,000 |
| 33,000 | |
| Total | $267,000 |
The actual amount spent and the actual units produced in the first three months in the Painting Department were as follows:
| Amount Spent | Units Produced | |||
| January | $252,000 | 56,000 | ||
| February | 242,000 | 51,000 | ||
| March | 232,000 | 46,000 |
The Painting Department supervisor has been very pleased with this performance, since actual expenditures have been less than the monthly budget. However, the plant manager believes that the budget should not remain fixed for every month but should "flex" or adjust to the volume of work that is produced in the Painting Department. Additional budget information for the Painting Department is as follows:
| Wages per hour | $14.00 |
| Utility cost per direct labor hour | $1.30 |
| Direct labor hours per unit | 0.25 hrs. |
| Planned unit production | 61,000 units |
a. Prepare a flexible budget for the actual units produced for January, February, and March in the Painting Department. Assume depreciation is a fixed cost. Enter all amounts as positive numbers. If required, round per unit amounts to the nearest cent.
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