Jheng Company has the following revenue and cost budgets for the two products it sells: Plastic Glass Frames Frames Sales Price P10.00 P15.00 Direct Materials 2.00 3.00 Direct Labor 3.00 5.00 Fixed Overhead 3.00 4.00 Net Income per unit P2.00 P3.00 Budgeted Unit Sales 100,000 300,000 The budgeted unit sales equal the current unit demand, and total fixed overhead for the year is budgetedatP975,000. Assume that the company plans to maintain the same proportional mix. In numerical calculations,Jheng rounds to the nearest centavos and unit. 1. The total number of units Jheng needs to produce and sell to break even is: a. 150,000 units c. 177,273 units b. 354,545 units d. 300,000 units 2. The total number of units needed to break even if the budgeted direct labor costs are P2 for plastic frames instead of P3 is a. 154,028 units c. 156,000 units b. 144,444 units d. 146,177 units 3. Net income computed using variable costing would exceed net income computed using absorption costing if: a. Units sold exceed units produced. b. Units sold are less than units produced. c. Units sold equal units produced. d. The unit fixed cost is zero.
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.
Jheng Company has the following revenue and cost budgets for the two products it sells:
Plastic Glass
Frames Frames
Sales Price P10.00 P15.00
Direct Materials 2.00 3.00
Direct Labor 3.00 5.00
Fixed
Net Income per unit P2.00 P3.00
Budgeted Unit Sales 100,000 300,000
The budgeted unit sales equal the current unit demand, and total fixed overhead for the year is budgetedatP975,000. Assume that the company plans to maintain the same proportional mix. In numerical calculations,Jheng rounds to the nearest centavos and unit.
1. The total number of units Jheng needs to produce and sell to break even is:
a. 150,000 units c. 177,273 units
b. 354,545 units d. 300,000 units
2. The total number of units needed to break even if the budgeted direct labor costs are P2 for plastic frames instead of P3 is
a. 154,028 units c. 156,000 units
b. 144,444 units d. 146,177 units
3. Net income computed using variable costing would exceed net income computed using absorption costing if:
a. Units sold exceed units produced.
b. Units sold are less than units produced.
c. Units sold equal units produced.
d. The unit fixed cost is zero.
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