Reported net income (or loss) for the first 6 months under variable costing is? Reported net income (or loss) for the first 6 months under absorption costing is? The amount of fixed factory costs applied to product during the first 6 months under absorption costing is over applied or under applied by what amount?
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.
The annual flexible budget below was prepared for use in making decisions relations to Product X.
|
|
100,000 units |
150,000 units |
200,000 units |
|
Sales volume |
$ 800,000 |
$1,200,000 |
$1,600,000 |
|
Manufacturing costs: |
|
|
|
|
Variable |
$300,000 |
$450,000 |
$600,000 |
|
Fixed |
200,000 |
200,000 |
200,000 |
|
|
$500,000 |
$650,000 |
$800,000 |
|
Selling & other expenses |
|
|
|
|
Variable |
$200,000 |
$300,000 |
$400,000 |
|
Fixed |
160,000 |
160,000 |
160,000 |
|
|
$360,000 |
$460,000 |
$560,000 |
|
Income (or loss) |
$(60,000) |
$90000 |
$240,000 |
The 200,000 unit budget has been adopted and will be used for allocating fixed manufacturing costs to units of Product X. At the end of the first 6 months, the following information is available:
|
|
Units |
|
Production completed |
120,000 |
|
Sales |
60,000 |
All fixed costs are budgeted and incurred uniformly throughout the year, and all costs incurred coincide with the budget. Over- and under-applied fixed manufacturing costs are deferred until year-end. Annual sales have the following seasonal pattern.
Portion of Annual Sales |
|
|
First quarter |
10% |
|
Second quarter |
20% |
|
Third quarter |
30% |
|
Fourth quarter |
40% |
- Reported net income (or loss) for the first 6 months under variable costing is?
- Reported net income (or loss) for the first 6 months under absorption costing is?
- The amount of fixed
factory costs applied to product during the first 6 months under absorption costing is over applied or under applied by what amount?
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