Problem 9 Johnson Corporation is preparing a flexible budget and desires to separate its electricity expense, which is semi-variable and fluctuates with total machine hours, into its fixed and variable components. Information for the first three months of 2009 is as follows: Electricity Expense P 31,500 20,000 35,600 Machine Hours January February March 3,500 2,000 4,000 Requirements: 1. Compute the variable rate per machine hour. 2. Compute the fixed portion of Johnson's electricity expense. 3. Compute the total manufacturing costs if Johnson's actual machine hours used is 4,500.
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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