Parkeville Company manufactures a single product and started the year with no inventories. Selected information about results for the period just ended include the following: Actual fixed manufacturing overhead $ 174,000 Actual variable manufacturing overhead 135,000 Applied fixed manufacturing overhead 200,000 Applied variable manufacturing overhead 132,000 Production volume variance 16,000 F Variable overhead efficiency variance 7,000 F Eight percent of this period's production has not been sold. There are never any work-in-process inventories. Required: a. Assume Parkeville writes off all variances to Cost of Goods Sold. Prepare the entries the company would make to record and close out the variances. b. Assume Parkeville prorates all variances to the appropriate accounts. Prepare the entries the company would make to record and close out the variances.
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.
Parkeville Company manufactures a single product and started the year with no inventories. Selected information about results for the period just ended include the following:
| Actual fixed manufacturing |
$ | 174,000 | ||
| Actual variable manufacturing overhead | 135,000 | |||
| Applied fixed manufacturing overhead | 200,000 | |||
| Applied variable manufacturing overhead | 132,000 | |||
| Production volume variance | 16,000 | F | ||
| Variable overhead efficiency variance | 7,000 | F | ||
Eight percent of this period's production has not been sold. There are never any work-in-process inventories.
Required:
a. Assume Parkeville writes off all variances to Cost of Goods Sold. Prepare the entries the company would make to record and close out the variances.
b. Assume Parkeville prorates all variances to the appropriate accounts. Prepare the entries the company would make to record and close out the variances.
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