January February March Аpril Estimated unit sales 36,000 $80 34,500 $80 39,000 38,600 S75 Sales price per unit Direct labor hours per unit Direct labor hourly rate Direct materials cost per unit S75 3.0 3.0 2.5 2.5 $18 $18 S20 S20 $9 $9 $9 $9 Required:
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.
Greiner Company makes and sells high-quality glare filters for microcomputer monitors. John
Craven, controller, is responsible for preparing Greiner’s
lowing data for the coming year. The direct labor rate includes wages, all employee-related benefits, and the employer’s share of FICA. Labor saving machinery will be fully operational by March. Also, as of March 1, the company’s union contract calls for an increase in direct labor wages that is included in the direct labor rate. Greiner expects to have 5,600 glare filters in inventory on December 31 of the current year, and has a policy of carrying 35 percent of the following month’s projected sales in inventory. Information on the first four months of the coming year is as follows:
Required:
1. Prepare the following monthly budgets for Greiner Company for the first quarter of the
coming year. Be sure to show supporting calculations.
a. Production budget in units
b. Direct labor budget in hours
c. Direct materials cost budget
d. Sales budget
2. Calculate the total budgeted contribution margin for Greiner Company by month and in
total for the first quarter of the coming year. Be sure to show supporting calculations.
(CMA adapted)
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