Parkson Limited has produced an overhead budget for next year based on two levels of activity, 5000 units and 8,000 units. It needs to calculate budgeted figures based on an activity level of 6,800 units. The budgeted figures for activity levels of 5000 and 8,000 are shown below: Parkson Limited. Budgeted Overheads for the year ending 31 December 2015 Production (Units) 5,000 8,000 Type of Cost $ $ Building rent Fixed 20,000 20,000 Building Depreciation Fixed 31,500 31,500 Indirect labour Variable 25,000 40,000 Indirect materials Variable 15,000 24,000 Electricity Semi-variable 30,000 36,000 Stock insurance Semi-variable 30,000 38,400 Total 151,500 189,900 Required:Calculate the budgeted cost for each of the six types of overheads at an activity level of 6,800 units giving consideration to the fact that some overheads are fixed costs, some are variable and some are semi-variable.
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.
A. Parkson Limited has produced an overhead budget for next year based on two levels of activity, 5000 units and 8,000 units. It needs to calculate budgeted figures based on an activity level of 6,800 units. The budgeted figures for activity levels of 5000 and 8,000 are shown below:
Parkson Limited. Budgeted
Production (Units) 5,000 8,000
Type of Cost $ $
Building rent Fixed 20,000 20,000
Building
Indirect labour Variable 25,000 40,000
Indirect materials Variable 15,000 24,000
Electricity Semi-variable 30,000 36,000
Stock insurance Semi-variable 30,000 38,400
Total 151,500 189,900
Required:Calculate the budgeted cost for each of the six types of overheads at an activity level of 6,800 units giving consideration to the fact that some overheads are fixed costs, some are variable and some are semi-variable.
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