Single-rate, dual-rate, and practical capacity allocation. Preston Department Store has a new promotional program that offers a free gift-wrapping service for its customers. Preston's customer-service department has practical capacity to wrap 5,000 gifts at a budgeted fixed cost of $4,950 each month. The budgeted variable cost to gift-wrap an item is $0.35. During the most recent month, the department bud- geted to wrap 4,500 gifts. Although the service is free to customers, a gift-wrapping service cost allocation is made to the department where the item was purchased. The customer-service department reported the following for the most recent month: Home Insert Page Layout Formulas Data B Actual Items Department Giftware Budgeted Items Wrapped 1,000 Wrapped 1,200 Women's Apparel 4 Fragrances Men's Apparel 850 650 1,000 750 900 450 Domestics 900 800 Total 4,500 4.000
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.
Using the single-rate method, allocate gift-wrapping costs to different departments in the following way:
Q.Calculate the budgeted rate based on the practical gift-wrapping capacity available and allocate costs based on actual usage.
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