Make a flexible budget from the following master budget. Computer Accessories, Inc. sells one of its main products, ergonomic mouse pads, for $15 each. Its variable cost is $7.20 per pad. Fixed costs are $210,000 per month for volumes up to 65,000 pads. Above 65,000 pads, monthly fixed costs are $283,000. The master budget is for 65,000 pads per month. Prepare a monthly flexible budget for the product for the month of February, showing sales revenue, variable costs, fixed costs, and operating income for volume levels of 45,000, 55,000, and 75,000 pads in addition to the 65,000 pads.
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.
Make a flexible budget from the following
Computer Accessories, Inc. sells one of its main products, ergonomic mouse pads, for $15 each. Its variable cost is $7.20 per pad. Fixed costs are $210,000 per month for volumes up to 65,000 pads. Above 65,000 pads, monthly fixed costs are $283,000. The master budget is for 65,000 pads per month. Prepare a monthly flexible budget for the product for the month of February, showing sales revenue, variable costs, fixed costs, and operating income for volume levels of 45,000, 55,000, and 75,000 pads in addition to the 65,000 pads.
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