The budget committee of Ferbel Company is preparing its manufacturing budget for the year. Initial estimates indicate an annual sales forecast of 40,000 units. The company shall also need 10,000 units for stock. Economic lot purchases of 1,750 kilos of material A at P8 per kilo and 1,000 liters of material B at P15 per liter are required to produce the 50,000 units. Budgeted factory overhead expenses for this production are: Fixed factory overhead Supervision P4,000 Depreciation P2,300 Insurance P 500 Variable factory overhead Indirect labor P0.50 per direct labor hour Indirect supplies P0.008 per unit General factory P0.10 per direct labor hour Labor hours and rates for the two operations are Operation 1 4,000 hours at P5.00 per hour Operation 2 2,000 hours at P4.50 per hour The budgeted total manufacturing costs for Ferbel Company for the year would be Group of answer choices P51,040 P60,800 P68,800 P76,560
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 budget committee of Ferbel Company is preparing its manufacturing budget for the year. Initial estimates indicate an annual sales
Budgeted factory
Fixed factory overhead
Supervision P4,000
Insurance P 500
Variable factory overhead
Indirect labor P0.50 per direct labor hour
Indirect supplies P0.008 per unit
General factory P0.10 per direct labor hour
Labor hours and rates for the two operations are
Operation 1 4,000 hours at P5.00 per hour
Operation 2 2,000 hours at P4.50 per hour
The budgeted total
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