PA 10. LO 8.4 Prepare a flexible budget for overhead based on the following data: Percent of capacity Direct labor hours Units of output Variable overhead Fixed overhead Total overhead 90% 3,600 900 $3,600 $6,000 $9,600 100% 4,000 1,000 $ 4,000 $ 6,000 $10,000 Normal capacity = 100% and overhead is applied based on direct labor hours Standard overhead rate = $10,000/4,000 = $2.50 per direct labor hour Direct materials are $67.50 per unit. Direct labor is $23.50 per hour. 110% 4,400 1,100 $ 4,400 $ 6,000 $10,400
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.
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