The Baldwin Company, in its master budget for 2019, predicted total sales of $168,000, variable costs of $52,000, and fixed costs of $54,400 ($24,800 manufacturing and $29,600 nonmanufacturing). Actual sales revenue for 2019 turned out to be $188,000. Actual costs were as follows: variable, $54,800, and fixed, $54,000. What was the total master (static) budget variance for 2019? (Note that this variance is also referred to as the total operating income variance.) Was this total variance favorable (F) or unfavorable (U)?
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 Baldwin Company, in its
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