QS LLC manufactures watches. For August 2016, it budgeted to manufacture and sell 6,000 watches at a variable cost of $74 per unit and total fixed costs of $118,000. The budgeted selling price was $240 per watch. Actual results in August 2016 were 6,800 watches manufactured and sold at a selling price of $250 per unit. The actual total variable costs were $229,600, and the actual total fixed costs were $130,000. Prepare a performance report that uses a flexible budget and a static budget. Comment on the results in requirement I.
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.
QS LLC manufactures watches. For August 2016, it budgeted to manufacture and sell 6,000 watches at a variable cost of $74 per unit and total fixed costs of $118,000. The budgeted selling price was $240 per watch. Actual results in August 2016 were 6,800 watches manufactured and sold at a selling price of $250 per unit. The actual total variable costs were $229,600, and the actual total fixed costs were $130,000.
- Prepare a performance report that uses a flexible budget and a static budget.
- Comment on the results in requirement I.
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