Hemphill Corporation uses customers served as its measure of activity. During June, the company budgeted for 20,000 customers, but actually served 19,000 customers. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June: Data used in budgeting: Fixed amount per month Variable amount per customer Revenue - $4.50 Wages and salaries $23,900 $1.40 Supplies $0 $0.80 Insurance $5,700 $0.00 Miscellaneous $5,000 $0.40 Actual results for June: Revenue $85,400 Wages and Salaries $52,700 Supplies $17,500 Insurance $5,500 Miscellaneous $12,200 Calculate revenue variance, spending variance for wages and salaries, and spending variance for insurance. Label them as favorable or unfavorable.
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.
Hemphill Corporation uses customers served as its measure of activity. During June, the company budgeted for 20,000 customers, but actually served 19,000 customers. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June:
Data used in budgeting:
| Fixed amount per month | Variable amount per customer | |
| Revenue | - | $4.50 |
| Wages and salaries | $23,900 | $1.40 |
| Supplies | $0 | $0.80 |
| Insurance | $5,700 | $0.00 |
| Miscellaneous | $5,000 | $0.40 |
Actual results for June:
| Revenue | $85,400 |
| Wages and Salaries | $52,700 |
| Supplies | $17,500 |
| Insurance | $5,500 |
| Miscellaneous | $12,200 |
Calculate revenue variance, spending variance for wages and salaries, and spending variance for insurance. Label them as favorable or unfavorable.
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