Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 5.7 ounces $ 2.00 per ounce $ 11.40 Direct labor 0.2 hours $ 11.00 per hour $ 2.20 Variable overhead 0.2 hours $ 6.00 per hour $ 1.20 The company reported the following results concerning this product in June. Originally budgeted output 3,900 units Actual output 3,500 units Raw materials used in production 22,500 ounces Purchases of raw materials 21,800 ounces Actual direct labor-hours 530 hours Actual cost of raw materials purchases $ 42,600 Actual direct labor cost $ 13,900 Actual variable overhead cost $ 3,850 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead rate variance for June is:
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.
Tharaldson Corporation makes a product with the following
| Standard Quantity or Hours | Standard Price or Rate | Standard Cost Per Unit | ||||||
| Direct materials | 5.7 | ounces | $ | 2.00 | per ounce | $ | 11.40 | |
| Direct labor | 0.2 | hours | $ | 11.00 | per hour | $ | 2.20 | |
| Variable |
0.2 | hours | $ | 6.00 | per hour | $ | 1.20 | |
The company reported the following results concerning this product in June.
| Originally budgeted output | 3,900 | units | |
| Actual output | 3,500 | units | |
| Raw materials used in production | 22,500 | ounces | |
| Purchases of raw materials | 21,800 | ounces | |
| Actual direct labor-hours | 530 | hours | |
| Actual cost of raw materials purchases | $ | 42,600 | |
| Actual direct labor cost | $ | 13,900 | |
| Actual variable overhead cost | $ | 3,850 | |
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The variable overhead rate variance for June is:
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