Rients Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for October. Fixed Element per Month Variable Element per Customer Served Actual Total for October Revenue $ 4,100 $ 182,900 Employee salaries and wages $ 42,300 $ 1,300 $ 98,800 Travel expenses $ 700 $ 30,500 Other expenses $ 31,500 $ 31,900
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.
Rients Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results of operations for October.
| Fixed Element per Month | Variable Element per Customer Served | Actual Total for October | |
|---|---|---|---|
| Revenue | $ 4,100 | $ 182,900 | |
| Employee salaries and wages | $ 42,300 | $ 1,300 | $ 98,800 |
| Travel expenses | $ 700 | $ 30,500 | |
| Other expenses | $ 31,500 | $ 31,900 |
When the company prepared its planning budget at the beginning of October, it assumed that 39 customers would have been served. However, 44 customers were actually served during October.
The spending variance for “Employee salaries and wages” for October would have been closest to:
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