Ramuthunyana (Pvt) Ltd. is comparing budget and actual data for the last four months. Sales Cost of sales Raw materials Direct labour Variable production overheads Fixed production overheads 950 000 133 000 152 000 100 700 125 400 438 900 922 500 130 500 153 000 96 300 115 300 427 400 Budget Actual PP The budget was prepared based on 95 000 units produced and sold, but actual production and sales for the four months period were 90 000 units. Ramuthunyana (Pvt) Ltd uses standard costing and absorbs fixed production overheads on a machine hour basis. A total of 28 500 standard machine hours were budgeted. A total of 27 200 machine hours were actually used in the period. Required: Prepare a revised budget at the new level of activity using a flexible budgeting approach
Ramuthunyana (Pvt) Ltd. is comparing budget and actual data for the last four months. Sales Cost of sales Raw materials Direct labour Variable production overheads Fixed production overheads 950 000 133 000 152 000 100 700 125 400 438 900 922 500 130 500 153 000 96 300 115 300 427 400 Budget Actual PP The budget was prepared based on 95 000 units produced and sold, but actual production and sales for the four months period were 90 000 units. Ramuthunyana (Pvt) Ltd uses standard costing and absorbs fixed production overheads on a machine hour basis. A total of 28 500 standard machine hours were budgeted. A total of 27 200 machine hours were actually used in the period. Required: Prepare a revised budget at the new level of activity using a flexible budgeting approach
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
Question
Ramuthunyana (Pvt) Ltd. is comparing budget and actual data for the last four months.
Sales
Cost of sales
Raw materials
Direct labour
Variable production overheads Fixed production overheads
950 000
133 000 152 000 100 700 125 400 438 900
922 500
130 500 153 000 96 300 115 300 427 400
Budget Actual PP
The budget was prepared based on 95 000 units produced and sold, but actual production and sales for the four months period were 90 000 units.
Ramuthunyana (Pvt) Ltd uses standard costing and absorbs fixed production overheads on a machine hour basis. A total of 28 500 standard machine hours were budgeted. A total of 27 200 machine hours were actually used in the period.
Required:
Prepare a revised budget at the new level of activity using a flexible budgeting approach
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