Panda Ltd manufactures and sells a single product which has the following cost and selling price structure: GHS per unit GHS per unit Selling price 150 Direct material 40 Direct Labour 25 Variable Overhead 35 Fixed Overhead 20 120 Profit per unit 30 The fixed overhead absorption rate is based on the normal capacity of 2,500 units per month. Assume that the same amount is spent each month on fixed overheads. Budgeted sales for the next month are 3,000 units. a. The breakeven point in sales units and value b. The margin of safety for the next month in units and percentage c. Contribution to Sales Ratio Required: Calculate d. The budgeted profit for the next month e. The sales required to achieve a targeted profit of 150,000 f. Illustrate the above information with a break-even chart
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.
Panda Ltd manufactures and sells a single product which has the following cost and selling price structure:
GHS per unit GHS per unit
Selling price 150
Direct material 40
Direct Labour 25
Variable Overhead 35
Fixed Overhead 20
120
Profit per unit 30
The fixed overhead absorption rate is based on the normal capacity of 2,500 units per month. Assume that the same amount is spent each month on fixed overheads.
Budgeted sales for the next month are 3,000 units.
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Required: Calculate
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d. |
The budgeted profit for the next month |
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e. |
The sales required to achieve a targeted profit of 150,000 |
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f. |
Illustrate the above information with a break-even chart |
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