Kanban Company estimated sales of 40,000 units at $6 each. Budgeted cost of goods sold per unit includes $1.20 of direct materials, six minutes of direct labor time at $15 per hour, and unit overhead cost of $1.30. Kanban pays a sales commission of 10% of sales revenue. Fixed selling and administrative expenses are budgeted at $25,000. Prepare a statement of operating income. A. Budgeted variable marketing expense is $__________________. B. Budgeted operating income is $__________________. C. Recalculate budgeted operating income assuming fixed selling and administrative expenses double and the selling price per unit increases 10%.
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.
Kanban Company estimated sales of 40,000 units at $6 each. Budgeted cost of goods sold per unit includes $1.20 of direct materials, six minutes of direct labor time at $15 per hour, and unit overhead cost of $1.30. Kanban pays a sales commission of 10% of sales revenue. Fixed selling and administrative expenses are budgeted at $25,000. Prepare a statement of operating income.
| A. | Budgeted variable marketing expense is $__________________. |
| B. | Budgeted operating income is $__________________. |
| C. | Recalculate budgeted operating income assuming fixed selling and administrative expenses double and the selling price per unit increases 10%. |
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