Springer Energy Inc. produces food products for people active in sports. The following budgeted volume and costs has been provided for one of their post-workout beverages: Budgeted production 65,000 units Selling price $4.00 per unit Direct material costs $1.30 per unit Direct labour costs $0.20 per unit Fixed manufacturing costs $19,500 Variable manufacturing costs $0.25 per unit Variable administrative costs $0.01 per unit Fixed administrative costs $3,900 Required What is the inventoriable cost per drink under each of the following methods? absorption costing variable costing throughput costing
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 1.3
Springer Energy Inc. produces food products for people active in sports. The following budgeted volume and costs has been provided for one of their post-workout beverages:
|
Budgeted production |
65,000 units |
|
Selling price |
$4.00 per unit |
|
|
|
|
Direct material costs |
$1.30 per unit |
|
Direct labour costs |
$0.20 per unit |
|
Fixed |
$19,500 |
|
Variable manufacturing costs |
$0.25 per unit |
|
Variable administrative costs |
$0.01 per unit |
|
Fixed administrative costs |
$3,900 |
Required
What is the inventoriable cost per drink under each of the following methods?
- absorption costing
- variable costing
- throughput costing
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