In your report to the CEO, you are to provide the following: A flexible budget based on the actual volume that was sold last year for both leather and vegan-polymer purses;
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.
In your report to the CEO, you are to provide the following:
A flexible budget based on the actual volume that was sold last year for both
leather and vegan-polymer purses;
![Exhibit 1
Static Budget
Vegan-
Polymer
5,000
$600,000 $2,850,000
Actual Results
Vegan-
Polymer
16,500
$1,875,000 $1,980,000 $3,855,000 $2,250,000
Leather
Total
Leather
Total
15,000
Sales volume
Sales revenue
12,500
29,000
20,000
$258,300
480,000
75.000
$813.300
$1,061,700
$856,800
912,608
174.000
$300,000
$135,000
135,000
30,000
Direct materials
$598,500
432,608
99.000
$1.130.108 S1,943.408
$450,000
735,000
120.000
$300.000 $1.290.000
$300,000 $1,560,000
$920.000
$640,000
Direct labour
600,000
90,000
Variable overhead
Total variable cost
$990.000
Contribution margin
Fixed overhead
Net income
$849,893 $1,911,593 $1,260,000
$920.000
$991,593
Standards from last year
Standard price/rate
(per metre/hour)
Leather
Standard
Vegan-
polymer
$40 per m $36 per m
$18 / hr
quantity/hour per unit
Vegan-
polymer
0.75 m
1.5 hrs
Leather
Direct materials
Direct labour
0.5 m
2 hrs
$20 / hr
Variable overhead allocated at a rate of $6 per unit
Actual results
Actual price/rate
(per metre/hour)
Vegan-
polymer
$42 per m
$15.30 / hr
Actual quantities
Vegan-
polymer
14,250 m
28,275 hrs
Leather
Leather
$41 per m
$20 / hr
6,300 m
24,000 hrs
Direct materials
Direct labour](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fafe89c71-2d39-41af-ac56-33afb1460a2c%2Fbe2150af-5d1f-4cfa-953c-3f3b8fc9de29%2Fck9d2x_processed.png&w=3840&q=75)
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