Renton company is reviewing the results of its production during the most recent fiscal year. Due to seasonality o
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.
Renton company is reviewing the results of its production during the most recent fiscal year. Due to seasonality of the bussiness, the volume of production flactuates during the year. Renton would like to analyze the fixed and variable costs for purposes of estimating the budget for upcoming fiscal year. The cost accountant provided the following data:
| Units produce | total costs | |
|
January |
1,100 | 12,530 |
|
February |
1,200 | 13,260 |
| March |
1,400 |
14,720 |
| April | 1,500 | 15,450 |
| May | 1,800 | 17,640 |
| June | 2,100 | 19,830 |
| July | 2,000 | 19,100 |
| August | 1,900 | 18,370 |
| September | 1,400 | 14,720 |
| October | 1,500 | 15,450 |
| November | 1,300 | 13,990 |
| December | 1,700 | 16,910 |
| Total | 18,900 | 191,170 |
Required: Calculate the variable cost per unit and the total fixed cost using the following:
a. High and low point method
b. Average method (compare the two lowest quarters)
c. Graphical method
d. Method of least squares
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