or the coming year, CFO Alexis King is considering three different sales targets: 2,900 canoes, 3,340 canoes, and 3,550 canoes. Ca
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.
Prepare a flexible budget for the three sales levels under consideration.
Waterway manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 2,900 canoes, 3,340 canoes, and 3,550 canoes. Canoes sell for $990 each. The
| Direct materials | $ | 297 | ||
| Direct labor | 112 | |||
| Variable |
||||
| Utilities | 35 | |||
| Indirect material | 30 | |||
| Indirect labor |
|
60 | ||
| Total | $ | 534 |
Annual fixed overhead cost is expected to be:
| Maintenance | $ | 20,600 | ||
| 43,500 | ||||
| Insurance | 29,500 | |||
| Rent |
|
33,690 | ||
| Total | $ | 127,290 |
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