Illustration 1. The expenses for the production of 5,000 units in a factory are given as follows: Per unit ? Materials 50 Labour 20 Variable Overheads 15 Fixed Overheads (7 50,000) Administrative expenses (5% variable) Selling expenses (20%Fixed) Distribution expenses (10% Fixed) Total cost of sales per unit 10 10 {116 You are required to prepare a budget for the production of 7,000 units.
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.
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